Peak body Retail NZ has welcomed the prospect of tax cuts in the upcoming Budget and is hoping this will lead to a lift in consumer confidence.
Last week, Finance Minister Nicola Willis unveiled a tax relief package intended to increase the take-home income for 83 per cent of New Zealanders over the age of 15 and for 94 per cent of households.
“I can confirm that our Budget will deliver further tax relief,” Willis said in a statement. “Its focus will be income tax relief aimed at middle and lower-income workers. The relief will be meaningful, but modest.
“It is overdue. Unlike most developed countries, New Zealand has made no adjustments to tax brackets to compensate for rampant inflation.
“Indeed, New Zealanders have not seen any changes to personal income rates and thresholds for 14 years, despite prices being 40 percent higher now than they were in 2010.”
Retail NZ CEO Carolyn Young said the tax cuts are great news for ordinary New Zealanders.
“We hope that this will reflect in an increase in consumer confidence which is critical to the retail sector.”
According to research firm Roy Morgan, New Zealand consumer confidence plummeted over the last two months, hitting 82.1 in April from 94.5 recorded in February.
Roy Morgan indicated that the fall in confidence was sparked by a technical recession recorded in the fourth quarter.
“[In March], we noted that the portion of responses that came in after Q4 GDP release on 21 March (showing a technical recession) were notably more pessimistic,” the firm shared. “April’s survey now fully reflects the Q4 GDP outturn, and the recession headlines that followed.
“Wellington experienced the sharpest deterioration in confidence in April and is the most downbeat region overall.”
Young continued, saying it is good to hear that Minister Willis is understanding of the challenges New Zealanders are facing and the strain of the current economic environment. According to her statement, Willis hopes to see some clear policies to support business and ideally remove some of the regulations that challenge small to medium enterprises included in the Budget.
“The indications of targeted focus, including investment in police, is critical to fight the current wave of retail crime so we will be looking forward to hearing more about this,” Young said.