An incessant mantra from National and ACT is that New Zealand is a "high-tax" country, with the the tax burden here being heavier than in other, comparable countries. We saw a classic example of this earlier in the week, with National declaring that "5% in ’05 won’t go far under high-tax Labour". But how does this claim actually stack up? Not very well, it seems. According to a report from the OECD, New Zealand's tax burden is among the lowest in the developed world. The overall tax rate for a single-income couple with two children earning the average wage is just 20.7% - the tenth lowest out of thirty OECD nations. Workers without children compare even better; while the tax burden is the same, we rank third lowest for this group, behind only South Korea and Mexico.
The opposition is, in other words, talking shit. But is this really surprising? For years they've been harping on about the need to cut the top personal tax rate "to remain competititve with Australia" - despite the fact that Australia has a higher top rate than us, as well as dedicated payroll taxes. I expect they'll pay a similar lack of attention to today's data...
This is classic western politics. one side wants taxes down (particularly the top rate) and the other wants taxes up (particularly the top rate) both sides will use any justification to support their position. Rational solutions are likely to be overlooked.
ReplyDeleteIt is pure nonsense to say the "overall" tax rate for a single-income couple with two children earning the average wage is just 20.7% - GST alone is 12.5%. It is likely they refer more to direct personal income taxation on earnings adjusted considering welfare offsets (which are numerous for average wage earners; the average wage being so low)
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