Kiwi taxpayers better off than most in OECD

By BRIAN FALLOW

New Zealand taxpayers get off more lightly than their counterparts in most developed countries, Organisation for Economic Co-operation and Development data shows.

Including local body rates, the overall tax burden, which is tax revenue relative to the size of the economy (GDP), was 34.9 per cent in 2002, the last year for which the OECD has a complete set of data.

That puts New Zealand 13th lowest of the 30 OECD countries, but is a deterioration from 33.3 per cent and 10th place the year before. It is also a heavier tax burden than Australia's 31.5 per cent.

The tax burden peaked at 38.3 per cent of GDP in 1989.

New Zealand, like Australia, gets an unusually high proportion of its tax revenue from taxing personal and corporate incomes.

That reflects the fact that, unlike other OECD countries, they do not have separate social security taxes to fund such services as pensions, health care or unemployment benefits.

The company tax rate of 33 per cent is above the OECD average of 30.8 per cent. Fifteen countries have a lower rate, 12 a higher one.

Company tax provides a higher proportion of the total tax take than in the average OECD country: 12.1 per cent compared with the average 9.3 per cent. In Australia, company tax provides 16.8 per cent of the tax take.

But because of the absence of social security levies, the gap between what it costs to employ the average worker in New Zealand and his or her take-home pay is lower than the OECD average.

For a single person on the average wage with no children, the gap between gross wage cost and take-home pay is 21 per cent, less than Australia's 24 per cent and the OECD average 25 per cent.

Those earning a third less than the average wage, or two-thirds more, are also more lightly taxed than in Australia or the average OECD country.

For a family with one breadwinner on the average wage with two children, the tax rate is 20.4 per cent, the same as Australia but below the OECD average of 26.9 per cent.

GST takes a smaller bite in New Zealand (12.5 per cent) than in most OECD countries (17.2) but higher than Australia (10).