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Budget 2012 Home Page Budget Economic and Fiscal Update 2012

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.

Table 11 - Tax forecasting effects of tax 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.

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