The main points

Press, 9 November 1984, Page 1

The main points

Some immediate effects of last evening’s Budget were—--0 Petrol price up 2.5 c a litre. This was a result of a 39 per cent increase in the road user component of the duty on motor spirits.

® Tax exemption on new life insurance and superannuation schemes removed.

This applies to life insurance policies, personal lump-sum superannuation and non-subsidised employee lump-sum superannuation schemes contracted after last night. A review of exemptions on existing schemes would be held next year, with discussions with affected parties. © Tax rebate on first home mortgages removed. This applied to first homes bought after last night, and did not affect those already enjoying the rebate. O Tourism grants. A 9.5 per cent grants scheme, now applying to big hotel projects in Auckland, will be extended to similar developments in Wellington, Christchurch, and Queenstown. © Fertiliser transport. All subsidies on fertiliser transport, covering the fertiliser, lime and acid transport subsidies and the aerial spreading bounty, ended as from last night. ® Irrigation and rural water-supply. Rates of subsidies were reduced, as of last night, on headworks and offfarm works on community irrigation schemes, from 70 to 35 per cent; and grant rates for rural water supply schemes were cut from 50 to 35 per cent. • Taxes on liquor and cigarettes rise. Standard strength beers will rise 1c a jug or 745 ml bottle, spirits 4.5 c to 6c a nip, and wines, from 45c to 57c a bottle. However, low-strength beers will fall about 3c a pint bottle. Cigarette tax rises the equivalent of 16c a packet of 20 cigarettes.

Some medium-term effects will be: © Prescription charge. A charge of $1 on some prescriptions will apply from February 1, 1985. Exempted will be contraceptives and those prescriptions for which patients already pay full charge, for children under 16, social security beneficiaries, and the chronically

© Bulk electricity tariff. This will rise 25 per cent from April 1 next year, adding an estimated $2 to $3 a week to an average household’s electricity bill. © Electricity concession. The South Island electricity concession of 25 per cent to industrial users will be phased out by March 31, 1987. But South Island prices will maintain a 10 per cent differential under North Island prices, reflecting the lower cost of supply in the South Island. © Road-user charges.

These will rise an average of 46 per cent from February 1, next year.

© Milk prices. The milk subsidy will be dropped early next year. No date has been set, but this will be announced later, along with a price rise, likely to be 4c or 5c a bottle, © Motor vehicle licensing.

Fees for motor vehicle annual licensing, registration and change of ownership will rise 20 per cent for the licensing year starting July 1, 1985. © The standard tax-rate, fringe benefits, National Superannuation. The tax rate of 31.5 per cent will rise to 33 per cent and will apply to incomes between $6OOO and $25,000, from December 1, this year. Fringe benefits, including cars, loans, and other subsidised goods and services, will be taxed at 45 per cent from April 1, 1985, as a tax on the employer. A tax of 25c in the dollar will apply to other income earned by National Superannuitants above $5200 a year. © Domestic airport dues. Will rise 75 per cent from December 1, 1984, except for helicopters, which will be charged one half of the full rate. ® Fertiliser.

The price subsidy on fertiliser will terminate on March 31, 1986. © Wholesale sales tax.

Rates were modified as of last night. On computer equipment classified under heading 84.53 of the Customs Tariff, the rate is set at 10 per cent of wholesale value. The rate on records, recorded tapes, blank magnetic tapes, and cosmetics was cut from 40 per cent to 20 per cent, and the rate applying to caravans and boats was cut from 20 per cent to 10 per cent.