Finance Minister Nicola Willis says she will be delivering “urgently-needed tax relief” in this year’s Budget.
The comments were made at the release of the Budget Policy Statement setting out the Government’s objectives for this year’s Budget due in May.
“The coalition Government intends to reduce debt, reduce government spending as a proportion of the overall economy, and get back to surplus,” Willis says.
She says tax cuts will provide cost of living relief to New Zealanders who have seen no change in personal income tax rates and thresholds since 2010.
They will be delivered through savings, reprioritisation and additional revenue sources, she adds.
The operating allowance – the amount of money allocated to fund new spending and revenue initiatives – will be set at less than $3.5 billion for the coming Budget.
Treasury figures point to a “materially weaker” New Zealand economy in recent years than previously expected.
While Treasury expects labour productivity to improve over the next few years, the improvement comes off a lower base.
Treasury’s economic scenario is $42.8 billion lower than forecast at the Half-Year Update (HYEFU) in December and core Crown tax revenue is $13.9 billion lower by the 2027/28 year compared to previous estimates.
In particular, core Crown tax revenue is around $3 billion lower in 2026/27 and around $4 billion lower in 2027/28, compared to the HYEFU forecast.
The statement sets out the Government’s priorities for this year’s Budget due out in May, including:
- meaningful tax reductions
- enduring savings across government departments and agencies
- improved public services with new spending focused on priority areas in health, education and law and order
- tight control over spending, with limited new policy commitments and cost pressures unable to be funded through reprioritisations
- a long-term sustainable pipeline of infrastructure investments.
