Nearly twice as many New Zealanders approve of the 2010 Budget overall than disapprove.
New personal income tax rates have overwhelming support – ranging from 50% to 80% across the four tax brackets, according to the first major nationwide survey on the Budget.
However, a majority (57%) disagree with increasing GST from 12.5% to 15%, and 54% don’t think they’ll be adequately compensated for this through tax cuts and other measures.
Some 25% agree with the GST increase and 19% believe they will be adequately compensated.
Overall, 40% rate the Budget good to excellent (7% excellent) and 22% say it is poor to very poor (7% very poor) while 26% are neutral and 11% say they don’t know, according a ShapeNZ national online survey of 2097 people, conducted between 5.15pm on Budget day May 20, and 8am Sunday May 23, 2010.
Results are weighted to provide a nationally representative population sample. The maximum margin of error is +/- 2.1%. The survey was commissioned by the New Zealand Business Council for Sustainable Development.
Cuts in personal and company taxes have strong approval:
Cutting the tax rate on income to $14,000 from 12.5% to 10% is supported by 79% (5% oppose). On the other brackets:
• 17% rate on income between $14,001 and $48,000 (down from 21%): 80% support, 5% oppose
• 30% rate on income between $48,001 and $70,000 (down from 33%): 66% support (13% oppose)
• 33% rate on income over $70,000 (down from 38%): 50% support (30% oppose).
The cut in company tax from 33c to 28c is supported by 46%, opposed by 24%, while 25% are neutral and 6% don’t know.
Other revenue raising:
Higher tobacco taxes have 69% support (22% oppose) while 8% are neutral and 3% don’t know.
Denying depreciation on rental properties is supported by 46% and denying it on commercial buildings is supported by 47%. On rental properties it is opposed by 19%, commercial properties by 14%.
Changing company tax rules to stop owners paying less tax than otherwise is backed by 73%, opposed by 7%.
Some 27% agree (32% disagree) that denying depreciation on residential rental properties will cause their owners financial problems. A strong majority (65%) think it will result in landlords putting up rents. (There are about 500,000 rental homes in New Zealand housing about 1 million people). Among rental home landlords surveyed, 48% say they will put up rents as a result of being denied depreciation.
Early childhood education
The decision to keep 20 hours of early childhood education (ECE) but defer plans to lift the 6 hour daily limit on this, and to make other changes in how ECE is funded, to cut spending by $280 million over four years, has 33% support. 20% oppose while 28% are neutral and 19% don’t know.
Impact on investment behaviour
The survey indicates the Budget could influence investment decisions in the way the Government wants.
Asked if changes to tax and property depreciation will make them more or less likely to invest in the resident or commercial property or other investments (like KiwiSaver, businesses and cash deposits):
• 29% say they are less likely to invest in residential property (3% more likely)
• 23% are less likely to invest in commercial property (2% more likely) and
• 18% are more likely to make other non-property investments like KiwiSaver, businesses and cash (13% less likely).
Tax system fairness
ShapeNZ polling in February on tax reform options found 65% thought the current tax system is unfair (only 11% fair) and 79% thought it needed reform.
When asked if the 2010 Budget will make the tax system more or less fair, 33% say more fair, 28% say less fair, 16% say it will make no difference and 23% say they don’t know.
Tax reform adequacy
Only 11% think the tax reforms have gone too far, while 23% say they haven’t gone far enough and 34% say they’re about right. 31% are not sure.
A second part to this results report, expected to be issued on Monday May 24, will cover New Zealanders’ views on the major capital expenditure items in the Budget (including KiwiRail, Auckland rail electrification and ultra-fast broadband investments); public private partnerships to run prisons, and new spending planned for programmes including education and health.
Results represent the views of survey respondents, not the Business Council’s policy views. They cover initial reactions to the Budget and views may mature as more information becomes available. The Business Council focuses on long-term solutions for New Zealand’s problems. It supports tax reforms so individuals can grow their wealth and the country can attract investment. Its most recent state on tax reform is here: http://www.nzbcsd.org.nz/story.asp?id=1054