FOLLOW THE YELLOW BRICK ROAD
A strong healthy economy underpins a fiscally responsible budget, with targeted spending on social investment within a tight financial framework; allowing the Government room to repay debt; transform the tax system and Inland Revenue, and invest in infrastructure for growth.
From an economic perspective, an excellent budget, with a good balance of investment and debt reduction.
What’s in it for you? A strong economy benefits us all, though sometimes comes at a social cost, and associated growing pains. The 2016 Budget attempts to deal with these and some areas better than others.
There appear to be offerings to appease some sectors, though it’s not clear how much thought has gone around it. But fundamentally a very sound budget with an Infrastructure and Education focus.
For many of BDO’s clients it’s the tax changes that are usually of most interest. Last month the Government announced a number of measures to aid SMEs by improving our tax systems with an aim to make them more user friendly. A sound and simple tax system is the key for underpinning any economy and especially so in a growth environment.
More detail provided in the tabs as found above.
Tax - SMEs
Tax reforms for SMEs to aid tax compliance, including Pay As You Go Provisional Tax, the despised Use of Money Interest largely removed, and fairer penalties - $187m
Tax – International/Multi National/GST and Internet transactions
Promises but no action. But this one’s hard to get right and hard to go ahead of the global approach being run by the OECD.
Recent announcements on transparency and country by country reporting a step in the right direction. GST on digital services already addressed but Budget silent on imported goods. No doubt it remains on the Inland Revenue work programme.
Tax Transformation – A Modern Tax System
Technology will reform how we pay tax. Cloud based accounting in conjunction with the banks and the Inland Revenue will make it easier and less complicated to pay tax - $857m – It’s a big project! But the way of the future
Infrastructure – AKL/CHC AND the Regions
Roads/Rail/Schools – as well as being needed, the economic multiplier effect will boost the economy by virtue of the jobs created – part of the $2.1b total infrastructure spend
Science & Innovation and Education
Investment for economic benefit as well as environment and society - $411m. Will have to be managed well as appears to be a hotch potch. Same for the $266m for Tertiary Education. $397m for Early childhood education
Much needed Bowel Screening programme, elective surgery - $135m. Corrections - $357m. Police $299m
Extra land freed up in Auckland. Social Housing and emergency housing investment. At what social cost though! A very distant memory to the quarter acre pavlova paradise.
Something for Everyone?
A wide range of assistance for:
- Maori and Pasifika
- Vulnerable NZers
- Native Birds
- Security and Cyber Security
- Healthy homes
- Special needs
- Protection of the young
- Sport (High Performance and Smoke-free programmes)
- Low income
- Bovine Tuberculosis (TB)
- Wilding conifers
- Civil Defence
- Smokers hit again but drinkers escape scot(ch)-free!