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Source: ONE News -
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The deferral of tax cuts and suspension of contributions to the New Zealand Superannuation Fund has been well received by business.
Finance Minister Bill English says the government's operating deficit is forecast to be $7.7 billion in the year to June 2010, increasing to $9.3 billion in 2011.
He says in these circumstances the government would have to borrow even more than it plans to in order to pay for tax cuts and that would be reckless.
Therefore the planned tax cuts in 2010 and 2011 are deferred but will be assessed in future Budgets.
Business NZ Chief Executive Phil O'Reilly says the Budget is realistic in the context of the times, while making initial and necessary steps towards increased productivity and growth.
"Taking the top off New Zealand's accelerating debt, while still targeting spending in key areas like infrastructure is a prudent approach.
"Delaying the promised tax cuts is obviously disappointing but business will take heart from the fact that they have been postponed not cancelled."
He says the hard work of growing our economy is still ahead.
The Newmarket Business Association says the suspension of the
2010 and 2011 tax cuts won't stop people spending, because
taxpayers would have been unlikely to spend the extra money on
consumables anyway.
"Deferring the tax cuts is the prudent thing to do. Focusing on
good economic management and stability will in the long term
benefit business more than a couple of rounds of tax cuts," says
Cameron Brewer, Association general manager.
KPMG says while the deferral of tax cuts and suspension of contributions to the New Zealand Superannuation Fund are a good start the government seems to be buying itself some time to fully consider its revenue and spending options.
Automatic contributions to the fund will be suspended until at least 2020-2021.
"These are just preliminary steps required to commence moving down the Minister of Finance's touted 'Road to Recovery'.
"Budget 2009 documents make it clear that a number of
initiatives are underway, but still in planning stage," says Paul
Dunne from KPMG.
He says the recently established Tax Working Group may assist
government's thinking in relation to options around the tax
system.
