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Speaker 1: Kyoda. I'm Georgina Campbell in for Chelsea Daniels and this

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Speaker 1: is the Front Page, a daily podcast presented by the

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Speaker 1: New Zealand Herald. The government's long awaited tax cuts are

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Speaker 1: finally coming into effect from today. National campaigned strongly on

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Speaker 1: the cuts and on Budget Day announced a fourteen billion

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Speaker 1: dollar tax package for the next four years. The average

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Speaker 1: kiwi should soon receive an extra forty dollars a fortnight

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Speaker 1: to spend how they wish, with more benefits coming for parents,

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Speaker 1: but the lowest income earners are only set to gain

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Speaker 1: nine dollars. So is this tax package fair for all?

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Speaker 1: And will it provide the cost of living relief the

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Speaker 1: government promised? Later we'll get more inside on how to

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Speaker 1: best use your tax cut from Auckland Central Budgetings Theresa White.

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Speaker 1: But first on the front Page, we'll get the political

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Speaker 1: rundown from New Zealand Herald Deputy Political editor and my

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Speaker 1: on the Tiles podcast co host Thomas Cocklin. Thomas, who

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Speaker 1: are the winners and losers from the tax cuts and

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Speaker 1: working for families changes coming into effect?

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Speaker 2: So the big winners are people who work and all

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Speaker 2: of those workers proportionately. It's people who and what you'd

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Speaker 2: call the middle income range a sort of sixty thousand

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Speaker 2: dollars popping up seventy thousand dollars. The government made the

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Speaker 2: decision or not to abolish or to shift that top

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Speaker 2: rate of tax, which is thirty nine percent on income

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Speaker 2: and over one hundred and eighty thousand dollars. So that

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Speaker 2: basically means that after about seventy thousand dollars, you don't

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Speaker 2: get any more money from this tax package than you

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Speaker 2: would otherwise. So someone earning say five hundred thousand dollars

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Speaker 2: would get the same from the tax cut part of

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Speaker 2: it as someone earning about eight thousand dollars. Roughly there

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Speaker 2: is I think the best way to think about the

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Speaker 2: tax package is as two parts. One of it is

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Speaker 2: just cutting your taxes. When you work, obviously, you pay

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Speaker 2: tax at a rate which is determined by how much

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Speaker 2: money you earn. What the government has done is adjusted

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Speaker 2: all those brackets up would by eleven point five percent.

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Speaker 2: Thereabout system changes apart from that top tax bracket, and

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Speaker 2: that basically means that if you have a job, you

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Speaker 2: will pay slightly less of your income and tax. That's

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Speaker 2: the first part, very easy to understand. The second part

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Speaker 2: is that. There are a number of schemes that the

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Speaker 2: government has which are situational and that changes how much

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Speaker 2: money you get depending on your situation in life. So

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Speaker 2: the biggest part of that is probably a Family boost

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Speaker 2: tax credit. Now that is for young families who have

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Speaker 2: children in early childhood education. You can get up to

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Speaker 2: seventy five dollars a week from that, which is a

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Speaker 2: tax credit that basically world it's like a rebate on

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Speaker 2: your early childhood costs. So you pay money for early

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Speaker 2: childhood education and then at the end of every quarter,

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Speaker 2: I believe id will give you a refund of some

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Speaker 2: of your costs up to seventy five dollars a week.

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Speaker 2: So that's a fairly massive tax cut. And as far

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Speaker 2: as the income tax cuts are concerned, the most you

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Speaker 2: can really get is about twenty dollars a week, but

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Speaker 2: obviously you only get that if you have a young

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Speaker 2: child in early childhood education and you spend rather a

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Speaker 2: lot of money on early childhood education. So it is

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Speaker 2: a lot of money, but not a lot of people

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Speaker 2: get it. The other couple of things are changed to

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Speaker 2: working for families, so that's a few hundred thousand families

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Speaker 2: who are in work not on a benefit, they get

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Speaker 2: more money through what's called an inwork tax credit up

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Speaker 2: to fifty dollars a week. That is a very common

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Speaker 2: tax credit. Many load of middle income families who work

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Speaker 2: get it. Some people possibly even don't even know that

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Speaker 2: they get it. It was introduced by Labor many years

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Speaker 2: ago by the Hell and Clark government, and so that

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Speaker 2: it's periodically adjusted. Labor was looking at adjusting it to

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Speaker 2: it the election stune app So there you go. And

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Speaker 2: the other one, the real hidden gem of this tax package,

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Speaker 2: I think, is the Independent Earner tax Credit. This is

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Speaker 2: a tax credit of ten dollars a week which is

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Speaker 2: designed for people who don't have children and who aren't

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Speaker 2: on a benefit, that are the sort of struggling middle

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Speaker 2: if you like. So it has an income floor, so

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Speaker 2: it means that if you're sort of a kid on

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Speaker 2: a paper run, you don't get this tax credit. But

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Speaker 2: if you basically if you have a full time job

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Speaker 2: but you don't earn a whole lot of money, you're

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Speaker 2: quite likely to get it. It's a ten dollars a

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Speaker 2: week bolt onto the tax system. And what it basically

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Speaker 2: means is that people who are on middle incomes, who

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Speaker 2: aren't receiving any other support from the government. Think about

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Speaker 2: someone in their twenties or thirties who doesn't have kids,

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Speaker 2: working hard but probably not hitting the peak of their

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Speaker 2: owning potential. They get an extra ten dollars a week

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Speaker 2: through this tax credit, and that basically means that someone

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Speaker 2: who's earning sixty five thousand dollars I think it caps

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Speaker 2: out at sixty six it starts abating at sixty six

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Speaker 2: thousand dollars now can take home about forty five dollars

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Speaker 2: a fortnight from this package. So that's quite a lot

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Speaker 2: of money for a text package, and it does help

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Speaker 2: to kind of tilt the balance a wee bit at

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Speaker 2: middle incomes. So what the government's done with the Independent

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Speaker 2: and A tax creator has basically expanded its eligibility. It

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Speaker 2: used to cut off much lower because inflations eroded the

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Speaker 2: value of that. They've expanded the eligibility. So now it

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Speaker 2: starts cutting off and I thinks sixty six thousand dollars

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Speaker 2: and it's all gone by seventy thousand dollars, So that

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Speaker 2: basically means that more people will be able to get it.

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Speaker 3: This program has actually been designed to actually cap out

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Speaker 3: so that actually someone like me, yes gets twenty dollars

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Speaker 3: a week, but actually someone who's on lower middle income

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Speaker 3: actually gets more than I get. That's exactly how it's

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Speaker 3: been designed for lower middle income workers who actually that

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Speaker 3: squeezed middle That's what we've done here. We've just lifted

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Speaker 3: the tax brackets up and then we've kepped them at

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Speaker 3: the top level.

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Speaker 2: Now I'm getting around to the losers. The losers are

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Speaker 2: beneficiaries who get nothing, and some people who are part

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Speaker 2: time on the benefit will lose a small amount of

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Speaker 2: money in order to for the scheme. One of the

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Speaker 2: things that has been cut labors twenty hours of pre

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Speaker 2: early childhood education being expanded to two roles. That's gone now.

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Speaker 2: And the benefit and vexation changes that Labor had introduced,

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Speaker 2: which meant that benefits would rise faster than they would otherwise. Well,

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Speaker 2: those who have been rolled back to people who are

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Speaker 2: on a benefit are not going to see the benefits

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Speaker 2: rise as much as they would have done under Labor.

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Speaker 2: So it's a real rebalancing of the transfer system towards

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Speaker 2: young families and people who work against people who are

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Speaker 2: on a benefit. And you can sort of see that

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Speaker 2: at the election. Young women were the target voters for

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Speaker 2: both parties, and so that early childhood education was designed

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Speaker 2: to be a policy that appealed to those voters.

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Speaker 1: This was obviously a major campaign promise for the government.

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Speaker 1: How are they selling these tax cuts this week? And

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Speaker 1: what does the opposition have to say about the cuts?

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Speaker 2: It is excruciating. The government is selling them via social

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Speaker 2: media blitz, they arranged post cabinet press conference around them.

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Speaker 2: I mean, obviously, it's a fourteen billion dollar tax package

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Speaker 2: over four years. It's a huge amount of money, so

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Speaker 2: you'd expect them to make sure they get a good

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Speaker 2: bang for their buck out of it. But I don't

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Speaker 2: think New Zealanders will be able to move in the

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Speaker 2: next few weeks without hearing some government minister talk about

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Speaker 2: how great it is that New Zealanders are getting to

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Speaker 2: keep more of their income. To be feared that it's

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Speaker 2: the first time in fourteen years that the tax system

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Speaker 2: has been substantially adjusted like this, so that actually is

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Speaker 2: quite a big deal. Marginal tax rates did creep up

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Speaker 2: for many New Zealanders, and it would have meant that

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Speaker 2: this year, for the first time, someone earning the full

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Speaker 2: time minimum wage would have had it part of their

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Speaker 2: income tax at thirty percent. Not much, It would have

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Speaker 2: only been a few hundred dollars tax at thirty percent,

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Speaker 2: but it would be quite a historic event to see

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Speaker 2: someone on the minimum wage, working full time being taxed

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Speaker 2: at such a high rate. You can see why they're

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Speaker 2: crying about it because it's quite significant obviously that it

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Speaker 2: has come at a large cost. So labors sort of

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Speaker 2: working up many examples of areas where the things that

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Speaker 2: have been cut to pay for them would have made

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Speaker 2: a greater difference to household budgets than the amount of

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Speaker 2: money people will receive and tax cut. So I've got

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Speaker 2: an example of a household income of one hundred and

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Speaker 2: twenty thousand, which is two people earning sixty thousand each.

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Speaker 2: And they look at sort of cuts to public transport subsidies,

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Speaker 2: the prescription charge which has been reinstated, rates and insurance

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Speaker 2: costs that have gone up, just to make the case

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Speaker 2: that these tax cuts will obviously give people some money,

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Speaker 2: but they will take it away in other areas and

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Speaker 2: in some cases, in many cases, some people will be

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Speaker 2: worse off at the end of the day. Interestingly, I

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Speaker 2: spoke to Chris Sipkins, the labor leader on my podcast

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Speaker 2: last week, and he didn't make the point that eventually

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Speaker 2: Labor was going to have to look at adjusting the

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Speaker 2: text thresholds, because if you don't adjust them, then people

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Speaker 2: do start to get text at too high a rate

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Speaker 2: of tax.

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Speaker 4: Fiscal drag is a problem. I acknowledge that fiscal drag

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Speaker 4: is a problem. We should always look at how we

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Speaker 4: can support people on the lowest incomes, and text is

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Speaker 4: one of those ways. But also one of the debates

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Speaker 4: about income text that frustrates me is that the parties

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Speaker 4: on the center right of the political spectrum have been

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Speaker 4: stressing for decades now that the way you raise people's

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Speaker 4: incomes is to cut their taxes. Actually, the way you

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Speaker 4: raise their incomes is to make sure they're big paid more.

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Speaker 2: And now obviously Labour's having this discussion about what will

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Speaker 2: probably be a text switch of some kind of capital

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Speaker 2: gains tax perhaps which will allow them to cut and

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Speaker 2: come text breads elsewhere. But at the moment they're looking

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Speaker 2: at the cost of living hacks that Labor had at

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Speaker 2: the last election, which did reduce people spending in certain areas,

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Speaker 2: and the fact that actually, you know, the tax cuts

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Speaker 2: at the end of the day might not be worth

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Speaker 2: some of those more targeted and dimensions that labor had.

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Speaker 1: One thing that could eat into these tax cuts that

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Speaker 1: sticks out for me, it's the sky high rates increases

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Speaker 1: that councils around the country have just signed off on.

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Speaker 1: But could there be more relief coming late this year

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Speaker 1: with cuts to the official cash rate looking likely.

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Speaker 2: It depends on everyone's circumstance. So two thirds of households

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Speaker 2: own their own house. In March of this year, LGNZ

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Speaker 2: published figures that said there would be an average rates

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Speaker 2: rise of fifteen percent, which is huge CPI and FLASH

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Speaker 2: and was tracking to come into the one to three

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Speaker 2: percent band by the end of this year. Fifteen percent

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Speaker 2: is a massive so certainly what the government returns to

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Speaker 2: some households will be more than easing up by councils,

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Speaker 2: and that is that is certainly something that the government

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Speaker 2: is frustrated with. So there were oftenly a third of

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Speaker 2: households own a house without a mortgage. Many of those

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Speaker 2: are retirees. New New Zealand has just under a million

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Speaker 2: people who collect superannuation and are retired. Many of them

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Speaker 2: will own their homes outright without a mortgage, although some

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Speaker 2: do still have a mortgage. A growing number. A third

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Speaker 2: of households own their home with a mortgage, and I

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Speaker 2: think have an average mortgage of less than three hundred

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Speaker 2: thousand dollars. Another third of households don't have a house

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Speaker 2: and therefore I don't have a mortgage. We have seen

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Speaker 2: some evidence of rents moderating, so that third that rents

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Speaker 2: might get some overdue relief. Rents have gone up massively

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Speaker 2: the last few years, and yes, so as the year

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Speaker 2: goes on, we've already seen the wholesale interest rates start

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Speaker 2: to show signs of easing, which will we eventually passed

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Speaker 2: on to people who have a mortgage. And the amount

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Speaker 2: of pain that will relieve already depend on the size

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Speaker 2: of someone's mortgage. So if you're in that third of

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Speaker 2: households that does have a mortgage, certainly, if you have

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Speaker 2: one of those larger mortgages, you know, my heart goes

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Speaker 2: out to you because you've been on the front line

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Speaker 2: of this interest rate spike and you've been doing the

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Speaker 2: heavy lifting to reduce inflation. So some relief to those

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Speaker 2: households will finally be coming. Obviously, if you have a

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Speaker 2: smaller mortgage, you'll get proportionately less relief, but of course

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Speaker 2: the cost of living prices probably hasn't hit you like

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Speaker 2: it's at other households, because you know the interest rate

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Speaker 2: hikes that you will have had on your rather smaller mortgage,

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Speaker 2: what WI you have actually fed through into your household

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Speaker 2: budgets as much anyway, So you know, swings and roundabouts.

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Speaker 1: Thanks so much for joining us, Thomas. The government has

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Speaker 1: sold these tax cuts as relief for struggling kiwi's so

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Speaker 1: how far is that relief going to be felt by

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Speaker 1: the average worker? To discuss more, we're now joined on

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Speaker 1: the front page by Auckland Central Budgeting's General manager Theresa White. Theresa,

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Speaker 1: what do you make of these tax cuts, like how

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Speaker 1: far will they go to providing people relief from the

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Speaker 1: cost of living?

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Speaker 5: Well, I mean, I think we all appreciate a little

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Speaker 5: bit of money in a bake pocket right now. So

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Speaker 5: it is tough out there. It's tough for everyone. Everyone's

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Speaker 5: struggling in their own way. Our numbers have increased year

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Speaker 5: on year in terms of people coming in to see us.

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Speaker 6: We've had a.

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Speaker 5: Probably one hundred percent increase in case numbers in the

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Speaker 5: last couple of years and across the board throughout the country.

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Speaker 5: Services like ours have had the man and forty percent

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Speaker 5: increase in people coming in and using our services. So

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Speaker 5: that kind of indicates that there's a level of financial

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Speaker 5: distress out there that it's a little bit unprecedented. I've

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Speaker 5: never seen it in the time that I've been working

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Speaker 5: in our service, and it's gotten more since COVID. But yeah,

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Speaker 5: a little bit of money is good, and I think

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Speaker 5: that a shift in the tax bracket is long over due.

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Speaker 5: But I think if it's at the expense of essential services,

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Speaker 5: my personal values is that I would much rather make

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Speaker 5: sure that everything's paid for properly. Some of the people

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Speaker 5: at the lower end of the income scale aren't going

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Speaker 5: to see any real relief at all, So it is

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Speaker 5: really you know, beneficiaries, people on low incomes are it's

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Speaker 5: going to be very, very nominal and they're just not

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Speaker 5: going to see it. It's just going to go straight

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Speaker 5: on household expenses, living expenses, for costs.

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Speaker 1: And when you say you know that people are really

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Speaker 1: struggling and you're seeing more people through your doors, can

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Speaker 1: you give some examples of the types of things that

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Speaker 1: they're struggling with.

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Speaker 5: Yeah, So, I mean we have had an increase with

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Speaker 5: people under more good stress. So that's definitely grown in

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Speaker 5: the last year. It's the interest rates that have gone up.

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Speaker 5: Its people that have bought recently. People are losing their

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Speaker 5: jobs and then struggling to pay mortgages and with the

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Speaker 5: higher interest rates that makes it much harder.

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Speaker 6: That's a big thing going on, and.

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Speaker 5: It's just those little things and these are some of

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Speaker 5: the things that happen traditionally, but it's getting a little

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Speaker 5: bit more market and pointed. You know, we've got super

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Speaker 5: innuitance who aren't using heaters in the middle the winter

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Speaker 5: because they're having to make the choice between buying food

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Speaker 5: and putting the heat on, and that's not okay. You know,

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Speaker 5: we've got an aging population in a period of time

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Speaker 5: where we've got lots of people going into retirement who

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Speaker 5: don't own their own home outright, So we're going to

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Speaker 5: see kind of even more stress on that as time

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Speaker 5: goes on. And when times the good people take on

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Speaker 5: dish and then something happens and they can'tfford to pay it.

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Speaker 5: And that's one of the biggest things that people come

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Speaker 5: to see us about is debts that they've got and

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Speaker 5: more and more is just the general cost of living.

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Speaker 5: So like with the tax relief across the board, it

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Speaker 5: might be fifteen to twenty dollars for kind of average

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Speaker 5: to middle income that our rents in Auckland have gone

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Speaker 5: up by about forty bucks a week over the last year,

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Speaker 5: so it just gets canceled out in terms of that relief.

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Speaker 5: So yeah, it's going to help a little bit.

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Speaker 6: But it's not going to make a major impact to

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Speaker 6: most petal swifts.

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Speaker 7: Sam Summers runs a small business delivering food during the week.

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Speaker 7: But along with today's onions, he also had this interpretation

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Speaker 7: of his government tax cut.

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Speaker 2: Is what the tax cuts represents to me? For me,

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Speaker 2: it is equivalent of two dollars fifteen a week or

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Speaker 2: free chubber chop lollipops.

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Speaker 1: What do you think people will be spending their tax

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Speaker 1: cuts on to improve their situation? You know, given their

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Speaker 1: existing costs are already so high, you know, do you

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Speaker 1: think they'll be putting that money towards paying off debt

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Speaker 1: or mortgages or be soaked up by other household costs?

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Speaker 5: Yeah, well, I mean my expectation is that most people's

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Speaker 5: tax cuts will likely be swallowed by household bills.

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Speaker 6: I mean, if you kind of do a bit of

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Speaker 6: the math. I just did a quick calculation for me.

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Speaker 5: I'm set to get maybe fifteen dollars a week, but

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Speaker 5: my rates are going up, and my insurance has gone up,

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Speaker 5: and I have to pay full price for my daughter's

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Speaker 5: school bus fares, and the doctors have gone up and

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Speaker 5: all of those things.

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Speaker 6: So I think that's the thing.

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Speaker 5: It will help pay for those things that are already

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Speaker 5: risen or already gone and kind of bring us back

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Speaker 5: to where we were maybe six months ago. But it's

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Speaker 5: my expectation it's going to get swallowed by household living costs.

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Speaker 5: If you are lucky enough to have it as extra

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Speaker 5: money in your back pocket, I would just suggest people

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Speaker 5: save and build up a buffer.

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Speaker 6: That's my biggest.

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Speaker 5: Learning from where I work is that people don't have

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Speaker 5: money put aside, and when times are tough, they've got

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Speaker 5: nothing to dip into. So I would really encourage people

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Speaker 5: to do that, and yeah, pay down debt, get rid

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Speaker 5: of it while you can. And it's just that interest

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Speaker 5: on debt as an absolute killer.

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Speaker 1: What else would you like to see from the government

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Speaker 1: to improve people's lives and relation to the cost of living?

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Speaker 1: If most of these tax cuts for some people are

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Speaker 1: just going to be eaten up immediately.

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Speaker 5: One thing is our benefits are very very low, and

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Speaker 5: I you know, there's a lot of talk about how

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Speaker 5: that works, but we see people who literally just don't

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Speaker 5: have enough money to pay for food so after rent costs,

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Speaker 5: so rents are really high. So if we have something

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Speaker 5: that can help bring rents down to make people's lives

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Speaker 5: affordable even housing costs, you know, there is some fundamental stuff.

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Speaker 5: And you've got rents, how much they've increased. So we've

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Speaker 5: gone from maybe you know, thirty percent of your income,

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Speaker 5: which is still pretty high, to fifty percent of your

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Speaker 5: income and then even maybe more so people are paying

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Speaker 5: up to eighty percent of their income just to put a.

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Speaker 6: Roof over their head. So that's one of the things

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Speaker 6: that really needs to change, I think in our world,

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Speaker 6: you know.

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Speaker 5: And there's been some good stuff with it, you know,

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Speaker 5: the family tax credits and we're tax credits, so they've

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Speaker 5: been risen, but the threshold the entry threatshold to get

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Speaker 5: them hasn't. So that would be really good to lift

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Speaker 5: that as well, so more people can access that support

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Speaker 5: and to make it available for beneficiaries as well. So

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Speaker 5: what I say is We've got a little bit of

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Speaker 5: adjustment for you know, low to middle income workers and

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Speaker 5: those in the h higher brackets, but those in the

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Speaker 5: lower thresholds have really really missed out in this package,

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Speaker 5: so that gap between the haves and the have nots

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Speaker 5: is widen considerably again, and I don't think that that's

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Speaker 5: good for society.

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Speaker 1: Thanks so much for joining us, Theresa, I really appreciate

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Speaker 1: your time. That's it for this episode of the Front Page.

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Speaker 1: You can read more about today's stories and extensive news

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Speaker 1: coverage at zidherld dot co dot mzed. The Front Page

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Speaker 1: is produced by Ethan Sills and sound engineer Patti Fox.

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Speaker 1: I'm Georgina Campbell. Subscribe to The Front Page on iHeartRadio

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Speaker 1: or wherever you get your podcasts, and tune in tomorrow

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Speaker 1: for another look behind the headlines.