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  HOME | Business & Economy (Click here for more)

New Zealand Raises Minimum Wage, Taxes on the Richest

SYDNEY -- New Zealand on Thursday raised its minimum wage and increased taxes on the richest, two measures to fight inequality and boost the economy in the wake of the country's Covid-19 epidemic.

The new minimum wage rises Thursday from NZ$18.90 ($12.68) to NZ$20 an hour and is expected to benefit around 175,000 people, according to the announcement made this week by the Prime Minister Jacinda Ardern.

In addition, the maximum tax rate rises to 39 percent on the income of people earning more than NZ$180,000 annually, up from 33 percent. The measure is expected to affect 2 percent of taxpayers.

According to official estimates, this new tax threshold will put about NZ$550 million additional into the Treasury's coffers for the financial year 2021 and NZ$634 million by 2024.

Ardern said Monday after a Cabinet meeting the measures represent "real and long-overdue improvements to the support we provide our most vulnerable."

The minimum wage increase, which affects many key workers during the Covid-19 pandemic, has been praised by unions and criticized by businesses who claim they have not yet recovered from the economic damage left by the health crisis, which has led to sporadic lockdowns, especially in the largest city of Auckland.

"Right at the moment with about 1,000 businesses having closed recently, a lot of people particularly in the hospitality sector are telling us that they simply can't take anymore increases because they're having trouble even paying their rent," opposition National Party leader Judith Collins told national broadcaster TVNZ on Wednesday.

However, Council of Trade Unions president Richard Wagstaff said that "it's important that the $20 minimum wage has finally become a reality."

"Covid showed us all just how crucial many jobs are to the functioning of our society, jobs in health, cleaning, on our border or supermarkets. Many of these crucial roles are poorly paid. It's time we valued those being paid the minimum wage more, and this increase is one way of doing just that," Wagstaff said.

According to data from the Ministry of Social Development, companies in the country have hired more staff since the beginning of the year, although there are still more than 200,000 people receiving unemployment benefits, almost 60,000 more than in mid-March last year, when the pandemic began.

A Treasury report published in December indicates that the deficit for the 2020/21 fiscal year, which ends on June 30, will be NZ$10.1 billion, which is below as forecast, although net debt will increase to 45.6 percent of GDP by 2023-24.

New Zealand, which closed its borders to curb the pandemic and ordered one of the strictest lockdowns in the world in March when it only had 50 cases, has recorded 2,141 confirmed infections and 26 deaths.
 

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