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The changes to the government’s income tax will be legislated before Christmas and will take effect on April 1 of next year.
Labor campaigned to create a new tax bracket for earned income of more than $ 180,000. The party proposed taxing income earned above $ 180,000 at 39 percent.
The new government is still tightening its legislative program for the short block of sessions before Parliament rises for the summer holidays.
Most of that time will be devoted to procedural matters such as the speech in the response debate and the opening speeches by the new deputies.
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Tax changes are one of the most urgent things the government will need to legislate, so payroll software operators will have time to update their systems before the change takes effect.
While a simple change like this could be made by using an SOP (an amendment) to amend a tax bill that was already making its way through Parliament, Chris Hipkins’ office has indicated that it will use a draft of completely new law to legislate the change.
The changes are intended to generate $ 550 million next year, increasing to $ 634 million by 2024.
The only other major economic event the government will have to mark before the end of the year is its Budget Policy Statement (BPS), where it will outline its goals and allocations for next year’s budget.
Labor promised to increase its operational allocations, the amount of new money available to spend in each budget, over the next four years during the election campaign.
The allocations would go from between $ 2.1 billion and $ 2.6 billion over the next four years to $ 2.625 billion each year.
This will be included in the BPS probably sometime in December.
Together with the BPS, the Treasury will prepare its Semi-Annual Economic and Fiscal Update or HYEFU. This will look at what is expected to happen to government accounts and to the economy in general over the next few years.
The most recent set of forecasts, PREFU, released before the election, was pessimistic. They showed slow economic growth, persistently high unemployment, and deficits that lasted into the 2030s.
Since then, the economic data has been somewhat more optimistic. The unemployment rate is one percentage point lower than what was forecast in PREFU. The economy is likely to perform better and more people will pay more taxes.
During Things In the financial debate, Finance Minister Grant Robertson said that, contrary to current forecasts, the country would return to surplus
“I am confident in the policies that we have, that we will find our way back to the surplus in time,” he said.
While deficits over the next four years are likely to remain large (the deficit in 2024 is forecast to be $ 12.4 billion), there is a possibility of a return to surplus in the more distant future as the economy improves. and the government assumes more revenue from next year’s tax increases.
