Today, the Minister of Finance, Dr Michael Cullen, announced his budget. Every year, at about the same time of year, the Minister of Finance announces a budget which tells us how the Government plans to spend our tax money in the next year and in the future.
The first thing that interests most people is tax cuts. Are we going to pay less tax in the future? We knew before the budget that the tax cuts would be small so it was not a surprise to learn that people earning an average wage will have only another $16 a week in their pockets. This will not happen until October 1st. The plan is for these tax cuts to increase over the next 3 years from $16 a week to $32. But remember that there is an election in November and if National wins the election, the Labour Government’s budget plans will not happen.
The tax rate for those earning up to $14,000 a year will reduce to 12.5%. For those earning $14,001 to $40,000, the rate will be 21%. The top tax rate of 39% will be for those earning over $70,000.
The Government is putting more money into their Working for Families scheme. This gives money to low income families. Single parents will get more money and so will elderly people on New Zealand Superannuation.
There is extra money in the budget to reduce Year One class sizes in primary schools, and to help reduce the cost of pre-school education for parents.
Extra money for Health was announced a few days ago. The Government is putting an extra $750 million a year into Health to reduce waiting lists.
Another important area is improving broadband internet, not just for businesses but also for households. The Government is planning to spend half a million dollars to put fibre optic cables underground to give fast internet to houses and is also planning to improve rural internet. They expect private business to spend the same amount of money on this.
In the next few days, the Opposition in Parliament will give their ideas about the budget. Already John Key, the Leader of the National Party, has called it the “block of cheese” budget because the extra money will just be enough to buy a big block of cheese. He has promised that if National win the election, they will give New Zealanders bigger tax cuts. The Labour Government says that this would mean cuts in government spending on things like Education and Health, or more borrowing from overseas. |