Issue 347 June 1, 2016
Ruling Parties rarely enjoy the privilege of sustained public support as they enter the final phase of their third term. But National Party seems to be bucking the trend and if opinion polls are to be believed, it would return to power with comforting majority, if elections are to be held today.
Something for everyone
That was the mood of the Nation as Finance Minister Bill English delivered his eighth budget to Parliament on May 26, 2016. If anything, Budget 2016 was populist, expansionary and full of promises. It accounted for increased federal spending and yet no one seemed to complain. If our schools, hospitals, science laboratories, research and development centres, roads and infrastructure are to get increased money, why would there be dissent?
There was something to appease everyone in this year’s budget, although, understandably, Labour and Greens, the two major adversaries of National Party were peeved. United Future and ACT, the two partners in government (although outside the Cabinet) stopped short, saying it was ‘a boring budget’ but ‘positive in its outcome, approach, scope and content.’
Good for SMEs
Small businesses across New Zealand, accounting for more than 90% of the commercial sector appeared appeased, since it offered ‘something good.’
Anna Curzon, Managing Director of Xero (https://www.xero.com/au/), which is increasingly being used as an effective accounting package by small enterprises, said that Budget 2016 will reduce compliance costs and make life simpler.
Mr English has provided $187 million in his small business tax package.
“This move by the government, in partnership with the private sector, is helping make tangible changes to policies for the good of industry. This is a fantastic step in the right direction for small businesses,” Ms Curzon said.
Provisional tax changes
The Provisional Tax changes, with a new pay-as-you-go option that allows small businesses to pay tax as they earn income, means they won’t have to guess a year in advance what their profit will be, she added.
“This is huge for small businesses, as Provisional Tax is the bane of small business owners’ lives. Previously they had to guess how much money their business might make in the future and forward pay this tax,” Ms Curzon said.
As a part of these changes, Xero will be able to enhance the current GST processes for small businesses, which means they can pay their provisional tax returns at the same time they pay their GST return. This will reduce compliance, time and effort for small business owners and align their provisional tax payment to their cash flow, she said.
Budget 2016 invests in a growing economy. In particular, it supports four significant measures.
The first is the Innovative New Zealand package – a $761 million investment that focuses on growing our science system, producing the skills New Zealand needs, and encouraging innovation and investment in regional New Zealand.
The second is a $2.1 billion infrastructure programme that focuses on transport, schools, and the investment needed to deliver a modern, flexible tax system.
The third is a Social Investment package providing $652 million more to support vulnerable New Zealanders and help them live better lives.
And the fourth measure I want to highlight is a significant investment in the health sector. This will receive an additional $2.2 billion over four years to ensure New Zealanders continue to have access to high-quality healthcare.
Ms Curzon said that Budget 2016 provides for training in science, engineering, agriculture and jobs in the trades, providing a larger pool of highly-skilled employees that can help grow small businesses in New Zealand.
“Many New Zealand businesses are challenged by the constant global competition for talent. 170,000 roles will need to be filled in the next four years in those sectors, and it’s great to see an opportunity to arm New Zealanders with the expertise needed to fill them,” she said.
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