GST is now two and half per cent higher, and you can expect to pay more for goods and services from Friday.

The GST hike to 15 per cent coincides with sweeping cuts to income tax rates, as part of the Government’s drive to reorganise our tax structure.

Finance Minister Bill English says farmers will benefit from the cuts.

“In the long run this is about backing our export engine which is largely driven by the rural economy.

"So there will be lower taxes on savings, lower company taxes and lower taxes on income. This is to encourage us to become and economy that earns before it can spend. Of course in the last decade or so we’ve become an economy which spends before it earns."

Mr English reiterated the Government’s opposition to calls for GST to be removed from fresh fruit and vegetables.

"In terms of the GST free veges, they (Labour) haven’t shown how they’re going to pay for the scheme, because for every dollar it saves per person per week, it adds another dollar of debt per person per week, so there’s no free lunch here – no free vegetables."

"We think we struck the balance just right – we’re going to make it reasonably clear to foreign owners just what we’re concerned about.

He also defended the Government’s recent changes to overseas investment criteria, which give ministers the power to direct how an application from a foreign buyer is examined, and consider the benefits of a sale to New Zealand’s economy.

"We think we struck the balance just right – we’re going to make it reasonably clear to foreign owners just what we’re concerned about.

"They are things like aggregation and vertical integration, we’d like to give them the opportunity to ‘New Zealandise’ their investment, or to approach an application in a way that’s not going to give rise to those concerns.”

Critics maintain the rule changes simply give the Government the power to veto unpopular foreign purchases.