A review of things you need to know before you go home on Thursday; Few Budget handouts, big price rises for smokers; More bad news for dairy farmers; Tax Freedom Day; NZD falls

A review of things you need to know before you go home on Thursday; Few Budget handouts, big price rises for smokers; More bad news for dairy farmers; Tax Freedom Day; NZD falls

Here are the key things you need to know before you leave work today.

TODAY'S MORTGAGE RATE CHANGES
There were no mortgage rate changes today.

TODAY'S DEPOSIT RATE CHANGES
There were no deposit rate changes today.

GOVERNMENT JUGGLES SPENDING IN BUDGET
Finance Minister Bill English released his eighth Budget, which increased planned government spending for the 2016/17 year by an extra $600 million to $1.6 billion,with the extra money mainly going into health and education. Burt there was a trade off, with projected government spending in the 2017 Budget reduced from $2.5 billion to $1.5 billion. That would leave little room for the $3 billion in tax cuts floated by Prime Minister John Key last week.

FONTERRA ANNOUNCES LOWER MILK PRICE THAN EXPECTED
Fonterra announced a forecast opening milk price of $4.25 pert kg of milk solids for the 2016/17 season, which was less than the bottom of the range of market expectations. ANZ's economists said many dairy farmers were still making a loss even after they had cut costs and reorganised their operations, and would continue to struggle to break even until the milk price moved back up above $5kg.

TAX FREEDOM DAY
Today was Tax Freedom Day - the day on which we supposedly stop working for the government and start working for ourselves, according to the Taxpayers' Union. That is based on OECD figures which show that general government outlays totaled 40% of GDP. "That means that up until today Kiwis have effectively been working for the Government," the Taxpayers' Union said.

CIGGIES TO COST $30 A PACKET
Today's Budget was described as boring by some commentators but smokers won't think so. The Government announced that excise tax on tobacco would increase by 10% a year for the next four years. That was likely to increase the cost of a packet of 20 to around $30 and raise an extra $425 million in tax revenue over the next four years, according to Associate Health Minister Peseta Sam Lotu-liga.

SWAP RATES FALL
NZ swap rates fell across the curve between 3-4 bps. The move lower is in response to another strong night in global markets and a corresponding softening in the US and German bond yields. Credit Default Swap spreads were lower again.

NZ DOLLAR LOWER
The disappointing announcement by Fonterra this morning, which set the opening milk price for the new season at $4.25 ($4.60 expected), saw the NZD head on a downward trajectory, a direction it has maintained for most of the day, before flicking back up after the Budget was announced. The NZD was trading around 67.2 USc just after the announcement of the Government's Budget.Check our real-time charts here.

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End of day UTC
Source: CoinDesk

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8 Comments

dp

If I were a smoker I'd be giving up pretty quickly, bugger paying all that money in taxes.

Isn't the government relying on it (excise duty) to balance the budget over the longer term?

I can see the end-game clearly now, years from now the 143 people left in NZ who smoke each paying tens of millions in excise to keep the whole country afloat. :)

Cigarettes $1 per pack airport duty free in Singapore so smokers are already paying well over the top for their addiction.
Unfortunately, marijuana growers are going to be well pleased with this announcement!

Tobacco Tax a recipe for increase in Milk-Bar and Service station raids and burglaries

Wait and see - you watch

So easy to avoid this tax - just grow your own. I've given up the baccy but used to grow a bit - grows like a weed and quite nice once you've picked up a few tricks with processing. Same with your booze and cannabis once they get round to taxing that.

NZ swap rates fell across the curve between 3-4 bps. The move lower is in response to another strong night in global markets and a corresponding softening in the US and German bond yields.

Softening to zero prior to being extinguished? Investors better make sure a central bank lets them out of technical default ahead of time.

Billionaire bond investor Bill Gross said the only way for Japan to eventually cut its debt burden is for the central bank to acquire it and forgo repayment, a scenario that may play out in similar ways in other countries. Read more

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