Sharechat Logo

BUDGET 2013 ACC levy cuts to cancel out fiscal drag

Thursday 16th May 2013

Text too small?

Accident Compensation Corp levies are projected to be cut progressively to give businesses savings of $1 billion a year by 2015/16, roughly cancelling out the impact of fiscal drag on the government's accounts.

The Budget documents show fiscal drag - where rising incomes move taxpayers into higher tax brackets and drag in more tax revenue - of about 0.2 percent, of $420 million a year in the current financial year, rising to 0.3 percent by 2016/17, or around $700 million.

In a statement for the budget, ACC Minister Judith Collins says "the government is confident that a decrease in ACC levies is sustainable."

In 2013/14, total levies collected would fall by some $300 million, increasing to a "likely" $1 billion reduction in two years' time. The announcements follow a $630 million reduction in levies in the current financial year, in which ACC has so far outperformed on its investment returns by $1.1 billion.

Finance Minister Bill English told reporters at the budget lock-up the government was only moving on ACC levies now it was confident there would be no return to the volatility of recent years.

While there was no conscious trade-off made between the impacts of fiscal drag, which could be rectified with either tax cuts or increases in tax thresholds, English said the ACC changes would "more than cancel out" fiscal drag.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Sky CEO put on notice by chunky vote against salary share scheme
Unions gearing up to oppose 'market tests' on Fair Pay Agreements
Mandatory farm plans scorned as 'tick box' exercises
Kiwi dollar firms on weak US retail data, capped by rate-cut expectations
17th October 2019 Morning Report
SkyCity hoses down union claims over potential job losses
OPINION: Fair Payment Agreements and 'swallowing vomit' - the lot of the CTU
MARKET CLOSE: NZ shares gain; Restaurant Brands climbs on upbeat outlook
NZ dollar stalls after Bascand's rate cut comments
Bascand says RBNZ will consider changing bank capital proposals

IRG See IRG research reports