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Who to believe – the OECD or the National?

23 May 2006

Who would you rather believe – the OECD or the National Party?

An average New Zealand family with two children will have the lowest tax burden in the OECD thanks to the Working for Families package, Social Development and Employment Minister David Benson-Pope told Parliament today.

Mr Benson-Pope told Parliament that OECD data confirms that for a single earner family with two children, on average earnings, Working For Families tax credits have taken New Zealand from having the eighth lowest tax take, to having the fifth lowest tax take, in the OECD.

"In the process New Zealand has overtaken Australia – lying in sixth place," says Mr Benson-Pope. "The 1 April extension of Working For Families will further reduce the overall tax take. If other countries remain unchanged, New Zealand will be ranked the lowest in the OECD for tax take.

"For families with children, Working for Families has made a big difference. Of course, these aren't facts that the National Party want to share with New Zealanders as they continuously talk up Australia and talk down their own country.

"The National Party has confirmed that it would borrow billions of dollars and cut health and education spending to deliver their misguided and poorly targeted tax cuts. What they haven't given us is a serious alternative approach to targeted tax relief that tells New Zealand families whether they will lose the tax relief they currently get under Working For Families to pay for tax cuts for high income earners."

Mr Benson-Pope says the OECD also confirms that for an average person, the overall tax take, taking into account all government contributions, transfers and tax credits, as a proportion of gross earnings, is already lower in New Zealand than Australia.

"Even after Australia's recent Budget, Treasury advise that New Zealand's tax wedge for the average family will remain lower than Australia's – Australia's tax cuts being targeted at the higher tax thresholds.

"National keeps claiming the grass is always greener in Australia. Ordinary New Zealanders need to know that the OECD doesn't see it that way," says Mr Benson-Pope.


Source: http://www.oecd.org/document/38/0,2340,en_2649_34533_36371174_1_1_1_1,00.html

Tax burden on average earnings:
Source: 2005 edition of the OECD's Taxing Wages publication

One earner couple with two children Single person without children
Country Tax Burden* Rank Country Tax Burden* Rank
Ireland 8.1 1 Korea 17.3 1
Iceland 11.0 2 Mexico 18.2 2
United States 11.9 3 New Zealand 20.5 3
Luxembourg 12.2 4 Ireland 25.7 4
New Zealand 14.5 5 Japan 27.7 5
Australia 16.0 6 Australia 28.3 6
Korea 16.2 7 Iceland 29.0 7
Mexico 18.2 8 United States 29.1 8
Switzerland 18.6 9 Switzerland 29.5 9
Canada 21.5 10 Canada 31.6 10
Slovak 23.2 11 UK 33.5 11
Japan 24.9 12 Luxembourg 35.3 12
Portugal 26.6 13 Portugal 36.2 13
UK 27.1 = 14 Norway 37.3 14
Czech 27.1 = 14 Slovak 38.3 15
Netherlands 29.1 16 Netherlands 38.6 16
Norway 29.6 = 17 Greece 38.8 17
Denmark 29.6 = 17 Spain 39.0 18
Spain 33.4 19 Denmark 41.4 19
Italy 35.2 20 Turkey 42.7 20
Austria 35.5 21 Poland 43.6 21
Germany 35.7 22 Czech 43.8 22
Finland 38.4 23 Finland 44.6 23
Greece 39.2 24 Italy 45.4 24
Hungary 39.9 25 Austria 47.4 25
Belgium 40.3 26 Sweden 47.9 26
France 41.7 27 France 50.1 27
Poland 42.4 28 Hungary 50.5 28
Turkey 42.8 29 Germany 51.8 29
Belgium 55.4 30
OECD average 37.3 OECD average 37.3

* Income tax plus employee and employer contributions less cash benefits as a % of labour costs in 2005

Source: http://www.oecd.org/document/38/0,2340,en_2649_34533_36371174_1_1_1_1,00.html

ENDS

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