Budget 2016 offers no tax surprises, but are tax cuts on the horizon?
Budget 2016 continued the theme of not being the vehicle to announce tax policy measures, according to Deloitte.
Deloitte CEO Thomas Pippos says the previously foreshadowed business tax changes around provisional tax, withholding tax rules and compliance matters were well received when announced, and continue to be so.
“The only criticism with these types of measures is the time that it takes for some long standing issues to be addressed, many of which are more remedial in nature and not naturally aligned with a Budget process,” says Mr Pippos.
Mr Pippos adds that tax cuts are inevitably on the horizon with projected surpluses anticipated to hit $5 billion and growing from 2019.
“A good problem to have, but a problem nonetheless, given the spread of who pays what tax with 19% of the population paying 1% of personal income taxes at one end of the spectrum, and 8% of the population paying 40% of all personal taxes at the other end,” says Mr Pippos.
“Adding to the complexity are the gravitational forces starting to hit corporate tax rates, including in Australia where they are targeting a 25% corporate tax rate over a 10 year horizon,” he adds.
“Certainly the ability for future tax cuts provides a blank canvass for the next term that could be painted differently depending who ends up holding the brush,” concludes Mr Pippos.
Deloitte’s team of experts look at today’s budget announcement, particularly how it relates to the long-term success of New Zealand. For our full Budget 2016 commentary and analysis go to www.deloitte.com/nz/2016budget.