The 2018-2019 New Zealand financial year ended at 0000 hours. In a topsy turvy year where a deteriorating international outlook dimmed hopes of economic stability improving, how did New Zealand get on domestically?
The 2018-2019 year began with the minimum wage rate being raised to $16.50/hr. Whilst it is true smaller businesses might have struggled with the increased costs, it is also true that many in lower income jobs such as myself were delighted to be getting a substantial increase. In my case I was earning more than the minimum wage, but in acknowledgement by my employer that it needed to give a number of staff including myself a rise bigger than the normal per annum increase, I got the equivalent of three standard yearly rises in one.
The Tax Working Group was announced and began work on looking at the N.Z. tax code and how it could be made to work better. When the T.W.G. released its report in February 2019 it came up with 100 recommendations, including a Capital Gains Tax, which I covered at the time of the announcement.
Internationally markets were buffered by the escalation of the Chinese-U.S. trade war which has resulted in hundreds of billions of dollars in tariffs being imposed on trade between the two countries. Along with persistent concerns that another banking collapse may be in the offing, as well as increasing tensions in the Middle East that drove petrol prices up significantly all of these factors and others such as Brexit worries and Japan’s stagnant economy contributed to a messy and at times gloomy international outlook.
So what does 2019-2020 hold for New Zealanders? Most immediately the minimum wage is rising again and by the time you read this, it will have increased to $17.70/hr. For those who were on the minimum wage when it went up last year and are still on it, this rise will mean many have had their wages increase by 15% since Labour took office.
In 2019-2020 new saving rate options will be introduced for Kiwisaver. Currently a Kiwisaver member has the option of 3%, 4% or 8% of their pay being deducted as savings to put in their scheme. From 01 April 2019 options for 6% and 10% will also be introduced.
There is some good news for businesses looking for an incentive to do research and development. It has been announced that a tax credit is also being introduced. This too, will take effect from 01 April 2019. This is part of a broader plan for improving research and development which also includes raising government investment to 2% of G.D.P. per annum.
As the year progresses I expect to hear more about the recommendations made by the T.W.G. earlier this year. In particular I am expecting more debate around the C.G.T. and what form it might take.
The Sino-American trade war appears to have scaled back somewhat, with attempts at getting to the negotiations table being made by both China and the United States. Iffy petroleum prices and ongoing uncertainty around Brexit continue to spook international markets. Whether any effort is made to relieve tensions remains to be seen.