Kiwi pockets to get $2b boost
Steven Joyce splashes the cash for low and middle income earners in first Budget as finance minister
Two billion dollars will go back into the pockets of New Zealand families, with the Government unveiling a combination of tax cuts, a boost to the accommodation supplement and Working for Families.
Some families could be in line for an extra $150 per week pumped into their household income.
Across the 1.3 million families the package would reach, however, the average lift to income would be $26 per week.
The biggest boost would go to people living in higher housing cost areas (for which the boundaries have been redrawn) and receiving the accommodation supplement.
Finance Minister Steven Joyce has unveiled his maiden Budget, with a much-anticipated Family Incomes Package as the centrepiece. It was ‘‘carefully designed to especially assist low and middle income earners with young families and higher housing costs’’.
Those on low incomes with high accommodation costs, will be able to tap into an expanded Accommodation Supplement rate.
The Government has also rejigged the areas according to housing costs, meaning 136,000 people already receiving the maximum supplement, will gain an average $36 per week towards housing costs alone. In some areas that figure could be higher.
For a two person household it increased to between $25 and $75 a week. The maximum increase for larger households rose by between $40 and $80 a week.
For example, a single person receiving a main benefit and paying $290 a week in rent while receiving the maximum weekly supplement of $100 in South Auckland, Tauranga or Queenstown, would see a $65 increase in their supplement payment.
Low-income working families facing high accommodation costs could see a bigger increase. A couple with two young children and one working partner on minimum wage, paying $435 a week in rent, could see a $145 increase to their weekly accommodation supplement.
The Government intends to raise the bottom two tax thresholds, boosting the incomes of about 1.3 million families.
The $14,000 income tax threshold will rise to $22,000 and the $48,000 will be lifted to $52,000.
The change provides a tax reduction of $10.77 a week, to anyone earning more than $22,000 a year, and a tax reduction of $20.38 a week for anyone over earning $52,000.
On top of the income threshold changes, the Family Tax Credit rates under Working for Families increase by $9.25 a week for the first child under 16.
Depending on the ages of subsequent children in a family, the Family Tax Credit increases by either $17.75 a week or $26.81. But the accompanying abatement rate now kicks in at a lower level of $35,000 a year income, and rises from 22.5 cents in the dollar, to 25c.
The move appears to cut out the provision that past National governments have labelled ‘‘middle class welfare’’, and would leave some families either neutral on the the tax changes, or slightly worse off.
Joyce has also handed something to students in the Budget; the Accommodation Benefit – which is paid to Student Allowance recipients, will also increase by up to $20 per week.
Superannuitants would see an automatic bump of $13 per week because payments were linked to after-tax wages.
None of these change take effect until April 1, meaning National will need to be voted back into Government for it to take effect.
Joyce said the Family Incomes Package would boost the incomes of more than a million families by an average of $26 a week.
The abatement rate changes to Working for Families, would claw back some increases, to target more support to lower income families, and Joyce conceded some families may be get less because of the tax changes. But they would gain in other areas.
‘‘The measures in this Budget are expected to lift 20,000 households above the threshold for severe housing stress, and reduce the number of children living in families receiving less than half of the median income by around 50,000,’’ Joyce said.
Kiwi families will get the most out of this year’s pre-election efforts.
WHAT ARE THE CHANGES?
Two of the income-tax thresholds will rise. The $14,000 threshold rises to $22,000; the $48,000 threshold rises to $52,000.
The Working For Families’ Family Tax Credit is up for some recipients and down for others.
The accommodation supplement increases and more areas will qualify for higher payments.
WHAT WILL YOU GET?
The Government says 1.3 million working-age families will get an average of $26 extra per week.
If you earn $22,000 or more a year, you will get $10.70 extra a week. Anyone earning more than $52,000 will receive $20.38 more a week.
The higher Family Tax Credit, available to children aged 16 to 18, will be expanded to cover all children – an increase of $9.25 a week for the first child and between $17.75 to $26.81 a week for each subsequent child.
The accommodation supplement will rise by $25 to $75 a week for a two-person household and between $40 and $80 a week for larger households. Student allowance recipients in housing stress will get up to $20 more a week in accommodation benefit.
A couple on super will get $13.12 more a week next year.
WHEN WILL I GET IT?
From April 1, 2018.
WHO MISSES OUT?
Individuals with no other state help lose the Independent Earner Tax Credit, worth up to $10 a week, but will get a boost from the tax changes.
The abatement rate changes for the Family Tax Credit will claw some of the gains back – at 25 cents in the dollar if you earn over $35,000 (up from 22.5c at $36,350).
About 200 households will lose a few dollars a week from the accommodation supplement changes.
There weren’t a whole heap of surprises in the Budget, much of it had already been announced and the tax package had become a bit of a ‘‘worstkept secret’’.
WHAT WILL IT COST?
Tax changes: $486m in 2017/18, $1.87 billion in 2018/19 Working For Families: $97m in 2017/18, $373m in 2018/19 Accommodation supplement: $88m in 2017/18, $361m in 2018/19 TOTAL: $603m in 2017/18, $2.075b in 2018/19. – Vernon Small