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New Zealand Tax System Now More Progressive

by Mary Swire, Tax-News.com, Hong Kong

06 September 2016


The top decile of income earners in New Zealand is forecast to pay 37.2 percent of income tax in 2016/17, compared with 35.5 percent in 2007/08.

The New Zealand Government has released data showing that the tax and welfare system has become more progressive. "This latest data confirms that New Zealand's income tax and support system significantly redistribute incomes to households in need," Acting Finance Minister Steven Joyce said. "Higher income households are paying a larger share of income tax than they were in 2008, and lower income households are paying less – the 30 percent of households with the lowest incomes are forecast to pay just 5.4 percent of income tax, compared with 6.3 percent in 2007/08."

"This is before the effect of redistribution from Working For Families and benefits. The Government has increased support for low income families to help New Zealanders through times of need. So at any particular time, a large number of households effectively don't pay income tax," Joyce said.

The Treasury estimates that, in 2016/17, 42 percent of households will pay less in tax than they receive from welfare benefits, Working for Families tax credits, New Zealand Superannuation, and accommodation subsidies. This compares with 39 percent in 2007/08.

"For the 30 percent of households with the lowest incomes, the NZD1.7bn of income tax they are expected to pay will be more than offset by the NZD10.6bn they will receive in income support," Joyce said.

TAGS: Finance | tax | economics | fiscal policy | social security | New Zealand | tax reform | individual income tax | Work

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