Kiwis do better than most on tax

The tax burden on many New Zealanders is lower than for people in most of the other 29 OECD countries, new information shows.

The main system of comparison used by the Organisation for Economic Co-operation and Development is the tax wedge.

The wedge is a measure of the difference between labour costs to an employer and the net take-home pay of an employee, including any cash benefits from Government welfare programmes.

Figures for last year show this country third from lowest for the tax wedge on single workers on the average wage, with a figure of 20.5 per cent, which is up about 1 percentage point since 2000.

The countries with lower figures are Korea and Mexico. The unweighted OECD average is 37.3 per cent.

The highest is Belgium - with 55.4 per cent - then Germany and Hungary.

The lot of a single-earner married couple with two children on average earnings improved in this country between 2004 and 2005, the tax wedge dropping from 18 per cent to 14.5 per cent.

Nevertheless the 2005 tax burden is still 1 percentage point above where it was in 2000 for people in that group, for which this country is fifth from lowest.

Ireland is at the bottom with 8.1 per cent, Turkey is highest with 42.7 per cent and the OECD average is 27.7 per cent.

A single person without children on two-thirds of the average wage has a tax burden of 18.9 per cent in this country, the third lowest in the OECD, where the average is 33.7 per cent.

The OECD did find New Zealand, with a figure around 42 per cent, had the second highest level of personal income tax as a share of total tax revenue among the 30 member countries.

This country was trailing only Denmark and slightly ahead of Australia, but when the total tax wedge was taken into account the picture was markedly different, with New Zealand third from lowest.

- NZPA