Here Are the Winners and Losers of New Zealand’s Budget
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(Bloomberg) -- Measures aimed at easing the pressure on “under-the-pump” New Zealand households were given priority in the budget announced by Finance Minister Grant Robertson Thursday in Wellington. Here are the winners and losers.
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Winners
Parents with young children
The government is spending NZ$1.8 billion ($1.1 billion) on early childhood education, with a flagship measure to make 2-year-olds eligible for the 20 hours of free care. This will save the average family with a 2-year-old about NZ$133 a week.
Public transport will be free for children under 13, and half price for people under 25.
Health system users
A NZ$5 charge per medical prescription will be scrapped. For some New Zealanders, the cost of prescription pharmaceuticals is a barrier to receiving the health care they need, the government said, estimating that 135,000 did not collect their medicine in the last financial year because they couldn’t afford it.
Electric car owners
The nation’s EV charging network will be expanded, with charging hubs to be rolled out every 150 to 200 kilometers on main roads and public charging at community facilities for all settlements of more than 2,000 people.
Funding will be made available for buying low-emissions heavy vehicles, like trucks and buses.
Game developers
Digital game development studios will get a 20% rebate if they have a minimum expenditure of NZ$250,000 a year. Individual studios will get up to NZ$3 million each year in rebate funding, which will be backdated to April 1, 2023.
Losers
Trust funds
The loophole that allowed high income earners to circumvent the top personal tax rate by funneling their money into trusts will be closed. The tax rate on trusts, currently 33%, will be aligned with the top tax rate, which was raised to 39% on income over NZ$180,000 in 2021. New Zealand’s tax department said there was a 50% spike in income subject to the trustee rate after the top income tax rate was increased.
The measure is estimated to raise revenue of NZ$1.1 billion over five years.
Multinational companies
Global anti-base erosion rules impose a tax on some large multinational firms operating in New Zealand where their income – either in New Zealand or other countries – bears an effective tax rate of less than 15%.
The measure is estimated to raise NZ$25 million over the five year operating period.
The digital platform economy
Goods and services tax will be applied to digital platforms providing accommodation, ridesharing and food and beverage delivery services.
Parents with children younger than 2
Babies and toddlers don’t qualify for the 20 free hours of early childhood care each week.
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