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Accountants had a lukewarm response to the tax breaks created by the Government in the Budget.
Finance Minister Michael Cullen chose to put more money in the pockets of New Zealand wage earners by pushing out income thresholds in a move that will give between $12 and $28 extra a week from October 1.
Those figures will be boosted to between $18 and $39 with another adjustment in 2010, and $22 to $55 in 2011. The tax rate will also be reduced 2.5 per cent for the lowest income bracket from October 1.
John Shewan, chairman of accounting firm PricewaterhouseCoopers, said that by the time the benefits were felt, inflation would have added a further 6 to 9 per cent to incomes, reducing their impact.
KPMG tax partner John Cantin said cutting the lowest tax rate benefited everyone, but he also questioned Dr Cullen's move.
"It's a bit grudging," he said, pointing out that some costs incurred in the $1.515 billion 2008-2009 overall sum were from bringing forward a Working for Families CPI indexation, which would have happened on April 1 anyway.
- NZPA