What happened to the mid-term toughie?

Mid term Budgets are generally the tough ones.

It’s when tough medicine is delivered in the hope people will have forgotten, or at least got used to, the taste by the time they vote.

This Budget hasn’t done that.

There were a few positive surprises and while there are a few complaints, the general response is positive.

From south to north:

The Southland Times says it was Cautiously corrective:

The Budget was more a series of cautious, reasoned calculations, political as well as economic, following a pretty well-signposted path. . .

Disinclined though most people may feel towards outbursts of impassioned applause, some acknowledgment is due that Finance Minister Bill English delivered, on balance, more by way of tax cuts than had been expected. . .

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Mr English is entitled to claim that New Zealand now has a fairer tax system.

This does not, necessarily, amount to a mission accomplished. Far bolder measures such as capital gains and land tax options were discarded, but the bottom-line issue is less whether the changes were correctional – they were – than whether they were too meek.

Mr English and Prime Minister John Key would be happy enough if the debate in future weeks were to be primarily whether they were cautious to a fault in how far they went down the right track.

But it won’t be. Neither life nor politics is that simple.

The ODT says it’s A Budget gamble:

What really matters, though, is whether the changes will stimulate investment in jobs and in product-creating industries (without which there cannot be lasting economic growth) or simply leave New Zealanders’ habitual spendthrift ways unchanged.

. . .   The Government deserves commendation for – at long last – tackling a few of the seriously detrimental distortions in the taxation system; but for the rest, a mark of “achieved with credit” is some way off.

In essence, the Government has judged its measures to be long term: a brave and necessary conclusion.

The Dominion Post sees Bold steps towards an economic recovery:

Finance Minister Bill English has not gone as far in his second Budget as he was advised to go by the high-powered Tax Working Group earlier this year. But he has been bolder than most pundits expected. And, wonder of wonders, the Budget is a coherent document that should encourage saving and investment and discourage consumption and speculative investment in property. . .

There is something else for the naysayers to consider. Even before the financial crisis struck, economic growth had stalled in New Zealand. Without changes to make it a more attractive destination for investment and skilled workers, New Zealand was facing a further slip down world economic tables. Mr English has made a promising start to arresting the trend.

The Taranaki Daily News writes Budgeting on widening the gap:

But the Government’s `surprise’ package for middle-class earners and its across-the-board tax changes cannot hide the fact that despite being touted as something for everyone, a significant portion of our community will still be getting substantially more than others.

The NZ Herald says Budget puts NZ on course for stability:

If National’s second Budget has done nothing else it has restored reasonable personal tax rates. . .

The Budget was upbeat on the economic recovery, forecasting growth of 3 per cent a year for four years, which would reduce unemployment to 4.5 per cent in four years and return the Government’s accounts to surplus in five years.

Most important, those forecasts enable the Treasury to plan debt reductions.

National Governments are never happier than when they can reduce taxes, and never more determined than when they can remove a welfare rort.

They managed to do both in this Budget, stopping those who minimise their assessable income from claiming income support from the state. . .

The Government has not forgotten that only half the country’s top earners have been paying the top rate, and that those who do pay it provide nearly half of the revenue extracted from personal incomes.

It has given the payers a more reasonable rate. If the rest in the highest bracket have been induced to contribute fully, the Budget will have been a success.

Keeping Stock has a round-up of views from commentators.

One Response to What happened to the mid-term toughie?

  1. Gravedodger says:

    As one with strong views on what I wold like to see done to move from the “entitlement” attitude our country seems to have with welfare and services provided by government,I applaud the budget as good politics and good first steps.
    Two things worry me which are outside the budget debate although very closely aligned.
    1 I am yet to be convinced as to why we are going out in front with the ETS as I see a delay as pragmatic.
    2 We must rein in the exponential growth of the Public service with so many entities that soothe pimples at great expense and would barely be missed by a huge slice of the electorate.Commissions, affairs (not mine naturally) and subsets of existing ministries that seem to spend most of their time justifying their very existence.

    Like

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