NZ income tax take growth outperforms OECD average

1.00pm


The New Zealand government's personal and corporate income tax take, as a percentage of gross domestic product, grew faster in the 2001 to 2002 year than in any other OECD country a report shows.

The Paris-based, thirty member Organisation for Economic Co-operation yesterday published its annual Revenue Statistics and also a comparative overview of tax policies.

The Revenue Statistics showed New Zealand's overall tax take in the 2002 year at 34.9 per cent of GDP was below the OECD average of 36.3 per cent. Provisional figures which did not include an average figure across the organisation showed NZ's total tax take eased slightly in 2003 to 34.8 per cent of GDP.

But the report showed that while the OECD average ratio of revenue from personal and corporate tax for 2002 was 12.9 per cent - down from 13.3 per cent the previous year - New Zealand was up to 20.6 per cent from 19.5 per cent.

On a provisional basis New Zealand's personal and corporate tax take also eased slightly in 2003 to 20.5 per cent.

The OECD's provisional estimates of tax ratios for 23 countries in 2003 "suggest that the fall in average ratio of total tax revenues to GDP may have come to an end", the report said.

Meanwhile the report also showed there had been a tendency over the last 30 years for New Zealand's central government to increase its share of the overall tax take while local government's share decreased.

Central government's share of the total tax take was 92.3 per cent 1975, 93.5 per cent in 1985 and 94.5 per cent in 2002. Local government had 7.7 per cent share in 1975, 6.5 per cent in 1985 and 5.5 per cent in 2002.

Elsewhere, the OECD's report on tax policy trends and reforms showed a "clear trend" of a steady increase in the tax to GDP ratio across most of the OECD since 1975.

Other trends identified included reductions in tax rates for high income earners and corporations.

The report said OECD high-income earners had seen their marginal personal income tax rate including social security and local taxes fall by more than 2 per cent between 2000 and 2003.

The trend was more pronounced for companies with the OECD member countries' average statutory corporate income tax rate dropping almost 3 per cent over the period.

- NZPA