Families paying high price

By BRIAN FALLOW

In one respect New Zealand is already in the top half of the OECD. Unfortunately it is in the table that ranks the net tax burden on families with children.

The OECD's annual Taxing Wages publication for 2002 compares the income tax and social security contributions that various family types make, offset by any Family Support-type payments for children.

For a single New Zealander with no children, the tax burden is 20 per cent of the average gross wage for a manufacturing worker, putting us at 22nd place among the 30 countries in the OECD league table.

At 20 per cent, single New Zealanders pay less of their incomes in direct tax than their Australian counterparts (24 per cent).

But when it comes to married couples with children, the Australians get off lighter.

A New Zealand family with a sole breadwinner and two children has a net tax burden of 18.2 per cent of the gross wage. The ratio is 19.2 if the other partner works and earns one-third of the average wage, or 19.5 per cent if he or she earns two-thirds of the average wage.

Among the OECD's 30 members, those are respectively the eighth, ninth and 11th highest net tax burdens for families with children.

They are also higher than Australia, where the equivalent tax burdens are 14.7 per cent, 16.8 per cent and and 19.2 per cent respectively.