Budget 2021 highlights
All quiet on the tax front
Finance Minister Grant Robertson’s 2021 budget is a cautious balancing act between incurring further debt and increasing spending on measures designed to reduce child poverty.
After the dramatic March tax announcements that caused a tailspin among property investors, Budget 2021 is silent on any new tax legislative proposals.
However, the Government’s Budget 2021 document refers to an initiative to “collect information on the level of tax paid by high-wealth individuals and their related entities. This information will be used to develop basic research to understand the overall distribution of income and wealth.”
Specific announcements that affect the business community are:
- Industry Transformation Plans across 7 areas of the economy — advanced manufacturing, agritech, food and beverage, digital, construction, tourism, forestry and wood processing
- infrastructure spending of $57.3 billion from 2021 to 2025 (including $10 billion for roads and public transport projects and $810 million on rail)
- extending the Training Incentive Allowance for employment-related training
- funding for a digital skills training programme for up to 60,000 small businesses, with supporting advisory services to help 30,000 businesses create digital business action plans
- $200 million to drive recovery in the tourism sector, with particular focus on Kaikoura, Mackenzie District, Queenstown Lakes, Fiordland and South Westland
- $15 million to support Māori tourism operators.
As part of the Government’s plan to reduce child poverty, there will be increases to benefits:
- All benefit rates will increase by $20 a week from 1 July 2021.
- A second increase will occur on 1 April 2022, with main benefits lifted in line with Welfare Expert Advisory Group (WEAG) recommendations.
- Families and whānau with children will also receive a further $15 per adult per week from 1 April 2022.
The Government has signalled it will review the Working for Families tax credits in line with WEAG recommendations.
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