Wellington, May 12 (IANS) New Zealand Finance Minister Bill English on Thursday ruled out promised tax cuts in this month’s annual budget, saying the government would focus on reducing the debt.
“By keeping on top of spending, we turned an 18 billion New Zealand dollar ($12 billion) deficit in 2011 into a small surplus last year,” English told the Wellington Chamber of Commerce.
“The 2014-15 surplus target was an extremely effective tool. But with that target achieved, the government is focusing more on repaying debt,” he said.
Net government debt increased from six percent of gross domestic product (GDP) in 2008 to 25 percent of GDP last year as a result of the global financial crisis and Christchurch earthquakes of 2010 and 2011, Xinhua news agency reported.
“Although our debt levels aren’t high by international standards, we could be stretched if another economic shock or natural disaster hit,” said English.
“So to prepare for the future, we are working to get debt down to around 20 percent of GDP by 2020.”
The improved economic outlook would be helpful to the government’s tax take, but spending pressures had changed as a result of higher-than-expected population growth and opportunities to invest in better public services.
As a result, the new spending allowances for the budgets this year and next year had been rearranged.
While lowering income taxes, particularly for low and middle income earners, remained a government priority, these would have to wait till next year or later, he added.
English will deliver his eighth annual Budget on May 26.