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New Zealand’s goods ands services tax (GST) will be raised to 15% from October this year, the government announced today in parliament.

From October 1 2010, personal taxes will be cut across the board, NZ Superannuation, Working for Families and benefit payments will all increase, Finance Minister Bill English announced in the Budget. The key aspects of the Budget applied to the business sector are:

•From the start of their 2011 financial year, companies will be taxed at a rate of 28%, down from 30%, ensuring New Zealand is competitive internationally.

•Tax rules will be tightened for investment property to make the system fairer and to encourage productive investment and exports.

•Budget 2010 strongly supports research, science and technology – a key engine for a faster growing economy. It provides $321 million over four years for new initiatives in this important area.

The government is expecting growth in March 2011 to come in at 3.2% compared with the 2.4% predicted in December.

“The package is conservatively forecast to add about 1% to the size of the economy by 2017,” English said in his speech.

Despite the better growth outlook, by 2012 GDP per capita will still be about 5% below Budget 2008 forecasts.

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