Tax freedom day arrives six days late
Tax Freedom Day fell yesterday – six days later than it did last year, according to the accountants who calculate it.
Each year Staples Rodway works out the day when New Zealanders have ‘‘collectively paid off their tax bill for the year and can keep the rest of their income for themselves’’.
It does it by analysing GDP, tax revenue and current tax brackets, and concluded that people were effectively paying more tax than they did in 2016.
‘‘The total amount Kiwis paid in taxes has increased by 9.5 per cent year-onyear, more than double the increase of last year, alongside a 5.1 per cent increase in nominal GDP,’’ said Staples Rodway’s Mike Rudd.
The tax-take increase was largely explained by rising corporate profits, and hence the tax companies paid.
‘‘Our methodology shows the true impact of the Government on your back pocket each year,’’ Rudd said. ‘‘Most of the growth in government tax revenue has come from the corporate sector. By the end of February this year, corporate tax collected was already 25 per cent higher than in the year to March 2016.
‘‘In the absence of any major tax changes in the last year, this can only be a sign of a well-performing New Zealand economy in spite of uncertainty on the global horizon.’’
‘‘Bracket creep’’ was also having an impact as rising wages resulted in people moving into higher tax brackets.
A person earning the average national wage was paying nearly 3 per cent more in tax than they did in 2011, Rudd said.
‘‘Had the marginal tax brackets moved in line with wage growth, the average wage earner would have an extra $33 in their pocket per week.’’
Tax Freedom Day can shift a great deal, depending on who occupies the Beehive. In 2008, Staples Rodway declared May 21 was Tax Freedom Day. In 2012, it fell on April 27.
ACT leader David Seymour said the taxpayer was ‘‘persecuted’’ under the current Government. ‘‘In just one year, New Zealanders have lost an extra week to the Government.’’
Tax Freedom Day fell on the same day that a new book on tax fairness by tax experts Terry Baucher and Deborah Russell was published.
In Tax and Fairness they call for a system that taxes income and wealth gains more consistently, as wealthy people can earn a lot of their annual increases in wealth from capital gains.
Rudd said tax freedom days were calculated in many countries around the world, and the New Zealand date sat around the middle of the pack.
Everyone’s individual tax freedom day would vary. For property investors, for example, it ‘‘probably would be a lot earlier,’’ Rudd said.
‘‘We are hearing that the Government is considering providing some relief to the taxpayer in this year’s Budget to be delivered on May 25,’’ Rudd said.
‘‘Our hope is that this will include adjusting tax brackets to account for inflation over the past nine years.’’