Latest news with #Half-YearEconomicandFiscalUpdate
Scoop
21-05-2025
- Business
- Scoop
Labour Slams ‘Big Tax Breaks' For Tech Giants As Government Ditches Digital Levy
Article – RNZ Labour says the government's decision to dump plans for a digital services tax is a tax break for tech giants like Facebook and Google. Russell Palmer, Political Reporter Labour says the government's decision to dump earlier work on a digital services tax is a tax break for tech giants like Facebook and Google. The government has confirmed it is removing the bill from its legislative agenda. It would have imposed a 3 percent tax on digital services for New Zealand users starting in January this year. Chris Hipkins told reporters at Parliament scrapping it would not have been a priority or the savings from pay equity claims in a Labour Budget. 'We already know where some of that money's going – it's going to tax cuts for landlords, tax breaks for tobacco companies; just today we found out it's hundreds of millions of dollars are going to tax breaks for multinational tech firms like Google and Facebook.' Labour, using forecasts from the Half-Year Economic and Fiscal Update in December, calculated the tax would have brought in about $479m over the next four years – starting from January 2026 – and $146m a year after that. 'Frankly, paying Kiwi women properly would be my priority,' Hipkins said. 'I think this government should stand up to New Zealand – I don't think giving big tax breaks to Google and Facebook is how we should be trying to ingratiate ourselves with Donald Trump's administration.' Revenue Minister Simon Watts, announcing the move in a statement on Tuesday, said the previous Labour government had introduced the bill in 2023 because of a perceived lack of progress from other countries in developing a similar measure – but the situation had since changed. 'A global solution has always been our preferred option, and we have been encouraged by the recent commitment of countries to the OECD work in this area,' he said. 'New Zealand has long supported, and benefited from, collective action and the global rules-based system. By focusing on a global solution, it will enable an agreed, consistent outcome across participating countries.' Watts said a multi-lateral process would be a more enduring model. 'Our assessment is, is there a better process to deal with the underlying challenge out there, and as a basis we've made a decision to take away the DST Bill that was put on the order paper.' He said Inland Revenue remained focused on compliance and integrity, including for offshore customers. Hipkins however said he had seen 'no evidence whatsoever that there's going to be an international solution to that'. 'Frankly it's not right that Google, Facebook and other big tech companies aren't paying their fair share of tax whilst other New Zealanders are being asked to pay more, and low-paid Kiwi women are basically being told that they're not going to be paid fairly.'
Scoop
21-05-2025
- Business
- Scoop
Labour Slams ‘Big Tax Breaks' For Tech Giants As Government Ditches Digital Levy
Article – RNZ Labour says the government's decision to dump plans for a digital services tax is a tax break for tech giants like Facebook and Google. Russell Palmer, Political Reporter Labour says the government's decision to dump earlier work on a digital services tax is a tax break for tech giants like Facebook and Google. The government has confirmed it is removing the bill from its legislative agenda. It would have imposed a 3 percent tax on digital services for New Zealand users starting in January this year. Chris Hipkins told reporters at Parliament scrapping it would not have been a priority or the savings from pay equity claims in a Labour Budget. 'We already know where some of that money's going – it's going to tax cuts for landlords, tax breaks for tobacco companies; just today we found out it's hundreds of millions of dollars are going to tax breaks for multinational tech firms like Google and Facebook.' Labour, using forecasts from the Half-Year Economic and Fiscal Update in December, calculated the tax would have brought in about $479m over the next four years – starting from January 2026 – and $146m a year after that. 'Frankly, paying Kiwi women properly would be my priority,' Hipkins said. 'I think this government should stand up to New Zealand – I don't think giving big tax breaks to Google and Facebook is how we should be trying to ingratiate ourselves with Donald Trump's administration.' Revenue Minister Simon Watts, announcing the move in a statement on Tuesday, said the previous Labour government had introduced the bill in 2023 because of a perceived lack of progress from other countries in developing a similar measure – but the situation had since changed. 'A global solution has always been our preferred option, and we have been encouraged by the recent commitment of countries to the OECD work in this area,' he said. 'New Zealand has long supported, and benefited from, collective action and the global rules-based system. By focusing on a global solution, it will enable an agreed, consistent outcome across participating countries.' Watts said a multi-lateral process would be a more enduring model. 'Our assessment is, is there a better process to deal with the underlying challenge out there, and as a basis we've made a decision to take away the DST Bill that was put on the order paper.' He said Inland Revenue remained focused on compliance and integrity, including for offshore customers. Hipkins however said he had seen 'no evidence whatsoever that there's going to be an international solution to that'. 'Frankly it's not right that Google, Facebook and other big tech companies aren't paying their fair share of tax whilst other New Zealanders are being asked to pay more, and low-paid Kiwi women are basically being told that they're not going to be paid fairly.'
Scoop
21-05-2025
- Business
- Scoop
Labour Slams 'Big Tax Breaks' For Tech Giants As Government Ditches Digital Levy
Labour says the government's decision to dump earlier work on a digital services tax is a tax break for tech giants like Facebook and Google. The government has confirmed it is removing the bill from its legislative agenda. It would have imposed a 3 percent tax on digital services for New Zealand users starting in January this year. Chris Hipkins told reporters at Parliament scrapping it would not have been a priority or the savings from pay equity claims in a Labour Budget. "We already know where some of that money's going - it's going to tax cuts for landlords, tax breaks for tobacco companies; just today we found out it's hundreds of millions of dollars are going to tax breaks for multinational tech firms like Google and Facebook." Labour, using forecasts from the Half-Year Economic and Fiscal Update in December, calculated the tax would have brought in about $479m over the next four years - starting from January 2026 - and $146m a year after that. "Frankly, paying Kiwi women properly would be my priority," Hipkins said. "I think this government should stand up to New Zealand - I don't think giving big tax breaks to Google and Facebook is how we should be trying to ingratiate ourselves with Donald Trump's administration." Revenue Minister Simon Watts, announcing the move in a statement on Tuesday, said the previous Labour government had introduced the bill in 2023 because of a perceived lack of progress from other countries in developing a similar measure - but the situation had since changed. "A global solution has always been our preferred option, and we have been encouraged by the recent commitment of countries to the OECD work in this area," he said. "New Zealand has long supported, and benefited from, collective action and the global rules-based system. By focusing on a global solution, it will enable an agreed, consistent outcome across participating countries." Watts said a multi-lateral process would be a more enduring model. "Our assessment is, is there a better process to deal with the underlying challenge out there, and as a basis we've made a decision to take away the DST Bill that was put on the order paper." He said Inland Revenue remained focused on compliance and integrity, including for offshore customers. Hipkins however said he had seen "no evidence whatsoever that there's going to be an international solution to that". "Frankly it's not right that Google, Facebook and other big tech companies aren't paying their fair share of tax whilst other New Zealanders are being asked to pay more, and low-paid Kiwi women are basically being told that they're not going to be paid fairly."
NZ Herald
21-05-2025
- Business
- NZ Herald
Labour slams ‘big tax breaks' for tech giants as Government ditches digital levy
'We already know where some of that money's going – it's going to tax cuts for landlords, tax breaks for tobacco companies; just today we found out hundreds of millions of dollars are going to tax breaks for multinational tech firms like Google and Facebook.' Labour, using forecasts from the Half-Year Economic and Fiscal Update in December, calculated the tax would have brought in about $479 million over the next four years – starting from January 2026 – and $146m a year after that. 'Frankly, paying Kiwi women properly would be my priority,' Hipkins said. 'I think this Government should stand up for New Zealand. I don't think giving big tax breaks to Google and Facebook is how we should be trying to ingratiate ourselves with Donald Trump's administration.' Revenue Minister Simon Watts, announcing the move in a statement on Tuesday, said the previous Labour Government had introduced the bill in 2023 because of a perceived lack of progress from other countries in developing a similar measure – but the situation had since changed. 'A global solution has always been our preferred option, and we have been encouraged by the recent commitment of countries to the OECD work in this area,' he said. 'New Zealand has long supported, and benefited from, collective action and the global rules-based system. By focusing on a global solution, it will enable an agreed, consistent outcome across participating countries.' Watts said a multilateral process would be a more enduring model. 'Our assessment is, is there a better process to deal with the underlying challenge out there, and on that basis we've made a decision to take away the DST Bill that was put on the order paper.' He said Inland Revenue remained focused on compliance and integrity, including for offshore customers. Hipkins, however, said he had seen 'no evidence whatsoever that there's going to be an international solution to that'. 'Frankly, it's not right that Google, Facebook and other big tech companies aren't paying their fair share of tax while other New Zealanders are being asked to pay more, and low-paid Kiwi women are basically being told that they're not going to be paid fairly.'
Scoop
19-05-2025
- Business
- Scoop
NZ Budget 2025: Economic Forecasting Is Notoriously Difficult, But Global Uncertainty Is Making It Harder
Article – The Conversation Theres no crystal ball when it comes to the future of New Zealands economy. But to understand the upcoming budget, people need to understand why forecasting is so hard. This year's budget will be one of the tightest in a decade, with the New Zealand government halving its operating allowance – the new money it has available to spend – from NZ$2.4 billion to $1.3 billion. The cut reflects weaker than expected growth owing to global economic turmoil. It also highlights just how difficult it is to predict what is going to happen when it comes to the economy. Economies are dynamic systems where relationships between variables shift. Even the current state of the economy is uncertain due to data revisions and lags in reporting. Despite this uncertainty, governments have to assume paths for revenue and expenditure to make meaningful plans. Based on the Pre-election Economic and Fiscal Update (PREFU 2023), the National Party announced plans to achieve an operating surplus in the year ending June 2027 during the 2023 election campaign. As forecasts changed, so did those plans. By the Half-Year Economic and Fiscal Update (HYEFU 2024), released in December 2024, the goal of an operating surplus had been pushed back to 2029. The table below shows the change in the 2027 forecasts for key economic indicators between the two fiscal updates. Nominal gross domestic product (GDP) measures the value of goods and services produced within a country during a specific period. It is a key determinant of tax revenue. Real GDP measures the volume of output of the New Zealand economy. Ultimately, the 2027 nominal GDP forecast at the half-year update was weaker than expected. This weakness was driven by lower than expected output, not by changes in prices. The 2027 forecast tax revenue fell even more sharply than the nominal GDP forecast. This was in part due to the government's personal income tax cuts which have been costed at $3.7 billion a year. More changes afoot We're likely to see further downward revisions in economic growth. The Treasury has already lowered its economic growth forecasts for 2025 and 2026, in part due to the expected impact of global tariffs. While the direct effects of the tariffs on New Zealand may be limited, the indirect effects – particularly through increased global economic uncertainty – are likely to be substantial. Research has shown that United States-based uncertainty spills over into the New Zealand economy by making firms more pessimistic about the future. This pessimism leads to firms delaying investment, ultimately reducing potential output in the future. Potential output is important as it represents the economy's capacity to grow without generating inflation. Potential GDP is affected by productivity, which has also been weaker than expected and one of the reasons Treasury lowered its forecasts after the pre-election fiscal update. The lesson from all of this New Zealand is running a structural budget deficit. That means the government is spending more than it earns, even accounting for the fact that governments automatically spend more and tax less in economic downturns. These deficits add to government debt, which can limit future spending and taxation choices. High debt can also hamper the government's ability to assist in counteracting the next downturn if the Reserve Bank's official cash rate is already near zero. It can also limit the ability of the government to respond to external shocks such as disasters or extreme weather events. These concerns are possibly behind the government's goal of returning to surplus by 2029. But there are counter-arguments. With pressing needs in many areas, some argue the government should be spending more now to boost productivity and growth. These contrasting views reflect a legitimate debate about values and priorities. Still, one point is clear: weaker than expected economic growth since the pre-election update has made the trade-offs between present and future fiscal choices more acute. The takeaway is that economic growth is essential for expanding the resources available to both households and governments. This is so they can spend money on things they deem important both now and in the future. A growing economy is not just about producing more for prestige – it's about creating the economic and fiscal resources to improve lives both now and in the future.
