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Tax is the main Budget feature this year, and it has been delivered on. Of course, those on lower incomes will be getting fewer extra dollars a week, but it is important not to forget that those on higher rates already pay a lot more tax in absolute terms.

Taking the GST rise into account, most people will be financially better off overall. This is a real commitment to reduce all tax brackets, and ensure that the savings are spread evenly.
More important than “how much more will I get” is that this is a major ‘rebalance’ of the tax system. This is the move of reducing tax on income, companies, and investment balanced against a small increase in tax on consumption.
The drop in the company tax rate to 28 percent is also a good move to increase our competitiveness in the Pacific. This brings us in line with Australian cuts, but at a faster rate. This doesn’t quite bring the rate to the lower levels around the OECD, but is a move in the right direction. Investment and saving is also incentivised, which is an encouraging move towards a more financially independent future for many, and relieving some of the burden the state will face from pensions in the future. 
Those on the top tax rate will no longer gain by hiding income in trusts and capitalisation safe harbours have also been cut, allowing companies to write off less interest against their profits. This tightening up of tax loopholes also extends to property, removing depreciation on many buildings. This may move investment to productive sectors and increase home affordability.
Spending for tertiary education will increase tuition subsidies for students. Rules requiring students to pass 50 percent of their courses in order to quaify for a loan are long overdue; the Government investment in an individual’s education requires a return. However, limiting eligibility to seven years of tertiary education seems overly strict, and may result in a number of legitimate student loans being foreclosed.
Overall, the Government has operated within its political promises, resulting in a little more spending than ideal, while aiming to stimulate growth and increase international competitiveness.
 
By Edward Greig
 
Edward Greig writes the Conservatory column.