Steven Joyce hints at tax bracket adjustments

Finance Minister Steven Joyce says the median wage has now caught up with the second-highest tax bracket, which will need to be moved soon.

But he won't reveal if he's planning to do it at next month's Budget.

"I'd like to one day. Can I do it this time? I still don't know. Maybe," he told The Nation on Saturday.

"The median wage has been growing in New Zealand - the median wage is now $48,000, the average wage is now $55,000. So someone who hits the median wage is on 30c in the dollar at that point.

"If they've been paying a student loan off that's another 12c, so that's 42c in the dollar."

Mr Joyce acknowledged that level of money disappearing from young workers' back pockets every pay makes it difficult to save, especially for a house deposit.

Presently:

  • the top tax rate of 33 percent kicks in at $70,000
  • between $48,000 and $70,000 it's 30 percent
  • from $14,000 to $48,000 it's 17.5 percent
  • below $14,000, 10.5 percent.

Those brackets haven't changed since 2010.

If he doesn't change the tax brackets this Budget, Mr Joyce says it will "absolutely" be on the agenda should he still be Finance Minister next year - and it's not the only tweak he has in mind.

"Certainly this year or next year, or the year after, I'm very keen to see us make the tax system work more clearly for people - that when they add another hours' work, they can see they're actually getting significant benefit back in their own pocket."

He acknowledges growing the overall economy isn't enough on its own to ensure people, particularly those on lower incomes, get their fair share.

"The only way you can ensure that occurs is you keep growing the cake, and also look at your incomes policies, your tax policy and your transfers policy...

"For me it's really important that people see the benefit of their work - that if somebody moves from part-time to full-time, they're not hit with a marginal tax rate from a reduction in their family tax credits."

Mr Joyce's first Budget as Finance Minister will be delivered on May 30.

Newshub.

Share to Facebook Share to Twitter Share to Email
Share to Facebook Share to Twitter Share to Viber Share to WhatsApp Share to Email