Tax cuts canned
Finance Minister Bill English has confirmed that tax cuts planned for next year and 2011 have been canned as the Government wrestles with deficits projected to blow out to more than $9 billion in the next two years.Auto payments to the Super Fund will be suspended for 10yrs while the country is in deficit as Govt reins in a debt track that would have seen every Kiwi owe $45k by 2023.
Be sure to check out Keith Ng explain one or two important things - and why superannuation could be a big deal in the next election - except he doesn't say that . It`ll be a big deal alright. As contributions to the super fund are cut, less money will be going into it in future. But the cost of paying super is expected to rise.
Bill English says that contributions don't affect NZS entitlements, as future governments will pay for it. So English is committing to a fund - with a payout of 66% of the average wage - he can't afford to fund, and possibly committing to payments he may not be able to pay. Meaning smaller payments. But future governments can sort that matter out later if they want current payments to be maintained, even though the fund was set up precisely - as Ng reminds us - because future government wouldn't be able to afford the payments.
Next year's budget is going to be interesting.