National and Labour tax policies .
The following information was compiled by CCH who have kindly allowed us to forward to you.
The major political parties have both developed tax policies for consideration by the electorate prior to the General Election on 8 November 2008. A summary of National and Labour tax policies follows.
Tax rates
The following tables show the announced tax rates on bands of taxable income for the next three income years. The third column for "total tax" shows the accumulating income tax on total income (so that, for example, income of $70,000 for 2009/10 attracts total tax of $16,150 under National rates and $17,110 under Labour rates).
Under Labour, tax actually payable may be reduced by the working for families tax credit. Under National proposals, the tax to pay may be adjusted under the "independent earner rebate".
Labour's tax rates are already enacted. National undertakes to legislate its proposals before Christmas.
Independent earner rebate
National proposes an independent earner rebate for a taxpayer who is not in receipt of New Zealand superannuation, the working for families tax credit or a benefit. The rebate will have two phases, one for 2009/10 and the other for 2010/11 and following income years. The rebate is intended to be for $10/$15 per week on income between $24,000 and $44,000, at which point it will abate at 13c per $1 of income to reach expiry at income of $48,000/$50,000. The rebate proposal is:
2009/10:
Income: $24,000 to $44,000
Rebate: $520
Abatement: 13c per $1 from $44,0001
Termination: $48,000
2010/11 and following:
Income: $24,000 to $44,000
Rebate: $780
Abatement: 13c per $1 from $44,001
Termination: $50,000
Research and development tax credit
National proposes to discontinue the 15% research and development tax credit from 1 April 2009.
The change is projected to result in a total saving of $619m through to 2011/12. Over that period, $315m will be applied to increase funding for the Performance Based Research Fund, the Marsden Fund and the Health Research Council (as to 50%) and funding of Crown Research Institutes (as to the other 50%).
Labour presumably will continue with the $700m capital fund for the New Zealand Fast Forward Fund for the pastoral and food industries (matching industry support).
KiwiSaver
National proposes three changes to the KiwiSaver scheme:
* the introduction from 1 April 2009 of a new employer/employee contribution rate of 2% of gross salary, retaining the existing rates of 4% and 8% and requiring employers to match only the 2% rate
* discontinuing from 1 April 2009 the employer tax credit of up to $1,040 per annum per employee
* repeal of the recent amendment prohibiting an employer from reducing an employee's salary on account of KiwiSaver employer contributions.
National proposes to retain other features of KiwiSaver such as the $1,000 "kick-start", exemption from employer superannuation tax on employer contributions and the employee tax credit of up to $1,040 per annum (although calculated on the 2% contribution rate). KiwiSaver incentives cost approximately $800m per annum.
