It was launched by the Minister of Revenue, David Parker.
In proposing that high income people are not taxed enough, Parker asserted in the report’s foreword that: “New Zealand is not a highly taxed nation”.
This claim is false.
Parker’s case is that we “sit in the middle of the OECD in terms of total taxes as a proportion of the economy.” That is like claiming that an obese person in New Zealand is not obese by American standards. So what?
Member countries of the OECD commonly have big (and problematic) welfare states. This gives them amongst the highest government tax and spending burdens in the world, New Zealand included.
On the Heritage Foundation’s database for 2022, only 31 of 178 countries gathered more in taxes relative to gross domestic product than New Zealand’s 32.3 percent. The ratio for the median country was only 18.5%.
Successful countries can have much lower tax burdens. Singapore’s tax ratio was put at only 13.1% of GDP. Some of its infrastructure we can only envy.
The IRD’s paper illustrates the point that when asset prices are rising fast those who own lots of property gain relative to those who do not.
Everyone has always known this of course. The case for a broader capital gains tax has been debated by government tax taskforces for as long as I can remember.
The Tax Working Group’s 2019 report rehearses the pros and cons. Even tax experts can agree to differ.
The minister argued that it was unfair if the very wealthy did not pay at least as high a proportion of their economic income in tax as everyone else. His example defined economic income to include all unrealised capital gains.
The public is also likely to think it is intolerably unfair to force households to sell the family home, farm or small business to get the cash to pay the tax on a paper capital gain that may be temporary. Most senior politicians know this.
Discussions of tax burdens should not be allowed to distract attention from the elephant in the room – an abundance of ill-justified spending.
Big government is no guarantee of prosperity, literacy, a well-run health system or quality public infrastructure. Sadly, these days New Zealand exhibits this point.
Dr Bryce Wilkinson is a Senior Fellow at The New Zealand Initiative, Director of Capital Economics, and former Director of the New Zealand Treasury. His articles can be seen HERE.
Member countries of the OECD commonly have big (and problematic) welfare states. This gives them amongst the highest government tax and spending burdens in the world, New Zealand included.
On the Heritage Foundation’s database for 2022, only 31 of 178 countries gathered more in taxes relative to gross domestic product than New Zealand’s 32.3 percent. The ratio for the median country was only 18.5%.
Successful countries can have much lower tax burdens. Singapore’s tax ratio was put at only 13.1% of GDP. Some of its infrastructure we can only envy.
The IRD’s paper illustrates the point that when asset prices are rising fast those who own lots of property gain relative to those who do not.
Everyone has always known this of course. The case for a broader capital gains tax has been debated by government tax taskforces for as long as I can remember.
The Tax Working Group’s 2019 report rehearses the pros and cons. Even tax experts can agree to differ.
The minister argued that it was unfair if the very wealthy did not pay at least as high a proportion of their economic income in tax as everyone else. His example defined economic income to include all unrealised capital gains.
The public is also likely to think it is intolerably unfair to force households to sell the family home, farm or small business to get the cash to pay the tax on a paper capital gain that may be temporary. Most senior politicians know this.
Discussions of tax burdens should not be allowed to distract attention from the elephant in the room – an abundance of ill-justified spending.
Big government is no guarantee of prosperity, literacy, a well-run health system or quality public infrastructure. Sadly, these days New Zealand exhibits this point.
Dr Bryce Wilkinson is a Senior Fellow at The New Zealand Initiative, Director of Capital Economics, and former Director of the New Zealand Treasury. His articles can be seen HERE.
3 comments:
I do hope they included every dollar the Govt borrows in their tax take!
Printing money or borrowing it is just another tax on the taxpayers, even if they see no benefit from it. In the last few decades it has become the norm for Govts to borrow money rather than tax their subjects directly, trying to hide how much we will have to pay in the future.
Much of the so called capital gain in property is is that the yardstick in measuring the dollar has been reduced in purchasing power by government policies. The second major reason is government regulations that have reduced the available land for housing and the raft of health and safety regulations.
But ignoring all that would we be better off if government garnered more to spend on welfare of the capital that could have been invested to create employment.
All goverments waste money. The bigger the government, the more that is wasted. It is axiomatic that high government spending results in low GDP. That means fewer jobs and lower incomes. High government spending also promotes inflation. It is logical therefore that smaller governments are better.
The terminology of 'left' & 'right' is "wrong think". It would be far more useful for people to think only in terms of "more government" or "less government".
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