Accessible News

Top storiesNew ZealandPoliticsBusinessEntertainmentSportsWorld

Tax cuts to be eaten up by cost-of-living: Public

Friday, 2 August 2024

“Having the extra $50 would be a lot more nowadays — that’s pretty much what we are left with after spending on food, rent and power,” Alicia King said.
“Having the extra $50 would be a lot more nowadays — that’s pretty much what we are left with after spending on food, rent and power,” Alicia King said.

Nationwide tax cuts were welcome but will make minimal difference to households affected by the cost-of-living crisis, according to people interviewed in Masterton by the Times-Age.

But an expert said, the tax cuts would likely have a greater impact in Wairarapa than other areas of New Zealand.

Changes that took effect on Thursday included increased personal income tax thresholds, an in-work tax credit, minimum family tax credit, and the extension of the independent earner tax credit.

Kiwis would receive an automatically calculated tax cut in their pay, which the Government stated would provide a benefit to about 3.5 million New Zealanders.

Alicia King said her extra money would be used to help pay the bills and could help many low-income earners.

“Having the extra $50 would be a lot more nowadays — that’s pretty much what we are left with after spending on food, rent and power,” she said.

Stephnie Burton said the government’s tax cuts were relative to other rising costs.
Stephnie Burton said the government’s tax cuts were relative to other rising costs.
Natasha McCullough said she was living on the streets, so anything like the Government providing tax relief was good, as long as there was no catch.
Natasha McCullough said she was living on the streets, so anything like the Government providing tax relief was good, as long as there was no catch.

“I’ve seen a lot of people struggling to this day, and the pricing for food is ridiculous.”

Stephnie Burton said, “other costs have gone up like having to pay for prescriptions is more, insurance is more, fuel is more and so it’s not really that helpful.”

Natasha McCullough said the tax cut was a good move.

“Everything is really hard at the moment,” she said.

“We are actually on the streets because someone stole our caravan, so we are living in a tent. Anything like what the Government is doing is good, as long as there is no catch.”

Wairarapa-based chartered accountant Stephen Kerr said tax cuts for Wairarapa earners and families would likely have a greater impact than for other areas of New Zealand.

“There is more advantage to those who come from these provincial areas, where medium incomes are lower than in the cities.”

Infometrics data mean annual earnings in Masterton District, with a population of 29,100, were $60,904 in the year to March 2023, lower than the New Zealand average at $74,754.

Wairarapa-based chartered accountant Stephen Kerr said, “The tax bands should be adjusted more often than 13 years to take into account the wages and salaries increase.”
Wairarapa-based chartered accountant Stephen Kerr said, “The tax bands should be adjusted more often than 13 years to take into account the wages and salaries increase.”

The Treasury’s tax calculator showed that a single person without children earning $60,904 a year would save about $50 a fortnight in tax.

Kerr said that since it had been 13 years since the income brackets had shifted, wages would be brought back into relativity to somewhere in that period.

“It’s got to the stage now where if you are on the minimum wage, you're in the 30% tax bracket, whereas it used to be in the 17.5% bracket.

“The tax bands should be adjusted more often than 13 years to take into account the wages and salaries increase.”

Treasury data showed that a minimum wage earner, $23.15 an hour, with no children working a 40-hour week, would save $25 a fortnight.

A couple with no children who each earned $90,000 would save about $2000 annually.

In 2023, the average household income in the Masterton District was $109,964, which was lower than the New Zealand average of $125,424.

Wairarapa MP Mike Butterick said the tax cuts were “good news” as the cost-of-living crisis had been biting hard in Wairarapa.

“I’ve been talking with individuals and small business owners that are finding things really tough,” he said.

“Personal income tax changes will bring some relief for most earners, with more cash available for groceries, petrol, and other necessities that have increased in price.”

Income tax threshold changes: