Budget 2022 is unlikely to elicit much excitement from the tax community as no new taxes or amendments to the income tax thresholds were announced despite some calls to do so. Rather, the government has opted to provide Kiwis with a temporary stimulus targeted at low to middle-income households.
This comes in the form of a cost of living payment of $350 that is to be paid in three monthly instalments from August 2022 ($27 per week). To be eligible, individuals would have to be earning less than $70,000 a year and not be eligible for the Winter Energy Payment. An estimated 2.1 million people are expected to receive this payment, which should cost the government over $814 million.
Taxpayers are also expected to benefit from an extension on temporary reductions on Fuel Excise Duty and Road User charges for an additional two months which will cost the government some $235 million. The half-price discount on public transport services is also going to be extended for another two months, with Community Services Cardholders able to enjoy this benefit indefinitely. This move is expected to not only relieve some of the inflationary pressures on Kiwis but also aid in reducing emissions.
Small businesses will also benefit from the proposed Business Growth Fund which will see the government provide $100 million in equity investment to SMEs. Through this capital investment, the fund will have a minority interest in the businesses that entitles it to a seat on the board.
In a bid to improve competitiveness in the supermarket industry which would bring down grocery prices, Finance minister, Grant Robertson has announced that the government intends to enact laws that will prevent supermarkets from placing covenants on sites where rival businesses may desire to build and open new stores.
Major spending is being slated for the health sector as $3.1 billion has been allocated to Health NZ over the next two years, $168 million for Maori Healthy Authority over the next four years, and $191 million for Pharmac over the next two years. The monies will be used to clear accumulated debts, pay for more services and treatments, improve wages, and buy medicines. The government has also announced plans to invest $4.7 billion in infrastructure projects including schools, hospitals and railways.
Thousands of children living in poverty are also expected to benefit from a change in rules that will now accommodate child support payments for sole parents. Sole parents were previously denied this benefit for decades under biased Child Support rules. Beneficiary sole parents can expect these payments to commence from July 2023.
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