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Govt accused of tax credit trickery

NZ Newswire logoNZ Newswire 26/05/2017

Finance Minister Steven Joyce outlines his budget plan to journalists and analysts. © AP Photo/Nick Perry Finance Minister Steven Joyce outlines his budget plan to journalists and analysts. The government has been accused of trickery in announcing its intention to scrap a tax credit with a claim it has limited uptake.

Finance Minister Steven Joyce scrapped the up to $10 a week Independent Earner Tax Credit in his first budget on Thursday.

Budget documents declare the tax credit had limited uptake with just 32 per cent applying for the credit during the tax year.

Mr Joyce made the same point in his budget speech.

But the family support package bill being debated under urgency in Parliament on Friday tells a different story.

It claim 80 per cent of those eligible for the tax credit claim it.

"Of those, around 60 per cent claim it after the end of the tax year," the bill explanation says.

The difference appears to be people claiming it during the tax year versus those who wait until the financial year is over before completing their tax returns.

Labour MP David Clark called it trickery while his colleague Michael Wood tweeted that the discrepancy was "a farce".

The government says scrapping the credit will also simplify the system by no longer requiring eligible taxpayers to file a tax return or use a different tax code.

Mr Joyce reassured those eligible for the credit would still be able to recoup the money though the changes to the income tax thresholds.

The lowest bracket has been lifted from $14,000 to $20,000 giving workers an extra $10.77 per week with the second bracket from $48,000 to $52,000, saving workers $20.38 per week.

It means those who would have been eligible for the credit will walk away with an extra $40 a year in their pockets compared to those who were ineligible who will get between $560 and $1059.

Mr Joyce's office has been contacted for comment about the credit's uptake.

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