Although it is always tricky to make predictions in tough economic times, NARGON believes that the National-led Government’s second Budget on May 20 will make a number of key announcements.  GST is likely to go up to 15% and there will be a corresponding series of increases in benefits and superannuation.  The top personal tax rate is likely to come down to 33% but, unless Australia has released the long-delayed Henry Report and announced its new business tax, the Government here is likely to defer a decision on New Zealand business tax rate with a view to matching the Aussies later.

There will be a crackdown on depreciation in residential properties but the Government is likely to back away from changing depreciation on commercial buildings after heavy lobbying from Business NZ and other groups.  The Government has already announced the establishment of a Productivity Commission to ‘run the ruler’ over Government activity.  The target will be poorly conceived legislation, unnecessary laws and burdensome regulations which add costs and compliance to businesses and depress productivity growth overall.  NARGON has welcomed this announcement.