Tax Policy Changes
This section details the changes to forecast tax revenue since the Pre-election Update as a result of changes in tax policy. Table 11 gives a full breakdown of the changes, while the supplementary text describes the specific policy changes.
|
Year ending 30 June $ millions |
2012 Forecast |
2013 Forecast |
2014 Forecast |
2015 Forecast |
2016 Forecast |
Total 5 years |
|---|---|---|---|---|---|---|
| Tobacco excise rate increases | .. | 22 | 94 | 167 | 249 | 532 |
| Petrol excise rate increase | .. | 55 | 59 | 60 | 61 | 235 |
| Extra audit and debt resource | .. | 83 | 98 | 98 | 98 | 377 |
| RUC increases | .. | 38 | 48 | 49 | 51 | 186 |
| Livestock valuation methods | .. | 46 | 46 | 46 | 46 | 184 |
| Tax credit reform | .. | 12 | 35 | 35 | 35 | 117 |
| Mixed-use assets | .. | .. | 9 | 50 | 50 | 109 |
| Other | (3) | (7) | 5 | .. | (1) | (6) |
| Total | (3) | 249 | 394 | 505 | 589 | 1,734 |
Changes in tax policy
Tobacco excise rate increases
Tobacco excise and excise-equivalent rates will be increased by 10% on 1 January in 2013, 2014, 2015 and 2016.
Petrol excise rate increase
The petrol excise and excise-equivalent rates will increase by two cents per litre on 1 August 2012.
Extra audit and debt resource
Additional funding will be provided to Inland Revenue's auditing and debt recovery functions. This is expected to yield gross revenue gains totalling nearly $100 million p.a. by 2016.
RUC increases
Road User Charges will increase on 1 August 2012 in line with the increase in the fuel excise rate.
Livestock valuation methods
Restrictions have been placed on the ability of farmers to switch between livestock valuation methods for a tax advantage. (This policy change was a base maintenance measure put in place to address a revenue issue that became apparent after the Pre-election Update. As such, it had no net effect on the tax revenue forecast, but is included here for completeness and to maintain consistency with tables that appear elsewhere in 2012 Budget documents.)
Tax credit reform
The child taxpayer credit, the housekeeping and childcare tax credit, and the tax credit for transitional circumstances will be discontinued with effect from the 2012/13 income year.
Mixed-use assets
New rules will prescribe the deductibility of expenditure relating to assets that are used both personally and for earning income.
