NZ tax less than most, study says NZ left behind on four-day week
New Zealanders should not complain too much about taxation, a study by the Organisation for Economic Co-operation and Development suggests.
The OECD found tax revenues equated to 32.3 per cent of GDP (gross domestic product) in New Zealand last year, versus an average of 33.8 per cent across the OECD. As a proportion of GDP, tax revenues have also fallen slightly in New Zealand since 2000, when they equated to 32.5 per cent of the economy, and from 36.2 per cent in 1990, the OECD found.
It was the only country in the OECD to enjoy GDP growth between 2018 and 2019 while experiencing a drop in the tax burden between those years, the Paris-based organisation reported. Across OECD countries, tax-to-GDP ratios ranged from 16.5 per cent in Mexico to 46.3 per cent in Denmark.
The figures take into account social security contributions that are common in other countries and local government rates, which often complicate tax comparisons.
It won’t take into account the new 39 per cent top tax rate on incomes over $180,000 a year that comes into effect from April. But based on forecasts of the money that will raise, that change would still not lift New Zealand’s tax take to the OECD average.
The Spanish government is poised to legislate for a four-day work week and the man who pioneered the model says New Zealand should do the same.
Andrew Barnes made global headlines when he successfully introduced the four-day week to his New Zealand trust company, Perpetual Guardian, in 2018.
Two years later, his bold idea appears to be catching on. This week Unilever announced a 12-month trial of the four-day week across its New Zealand operation.
If successful, the multinational consumer goods company could expand the model to 165,000 workers globally.
On a larger scale, Spanish workers could soon be enjoying a four-day week as the country’s leftwing government looks at options to deal with the economic fallout of the Covid-19 pandemic.
As part of its 2021 budget, the Spanish finance ministry is considering proposals to give financial support to businesses that cut the work week to 32 hours, with no loss of pay to workers.
Barnes said while
Perpetual
Guardian’s four-day week had given New Zealand a head start on a productivity-focused flexible work model, the country was now falling behind.
‘‘Europe is now ahead of the pack with our initiative. Specifically, in Spain it is a small left-wing party, Ma´ s Paı´s, which has proposed the pilot plan, budgeted to cost about 50 million euros.’’
Barnes said it was time for the New Zealand Government to match its rhetoric with action.
In May, Prime Minister Jacinda Ardern suggested employers consider a four-day week as an option to boost the country’s tourism industry and help employees strike a better work-life balance.
During a Facebook live video, Ardern said people had reported that they would travel around New Zealand more if they had the flexibility of leave to do so.
But despite the prime minister’s comments and some other positive noises from Parliament, it was disappointing that there had been no practical follow-up to support businesses and workers, Barnes said.
‘‘The four-day week is radical but rational, and it is what the New Zealand economy needs if we are to, as political leaders around the world like to say, build back better.’’
Barnes said the four-day week model directly addressed gender equality and the pay gap, mental health, climate change and other issues the Government had talked about and it now needed to do more than talk.
‘‘Business leaders have been broadly enthusiastic about the fourday week in dozens of countries, but we cannot reap the full economic and social benefits of it without legislative change of the kind Spain is proposing.’’