Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Significant income redistribution after tax reforms

Hon Bill English

Minister of Finance


28 May 2014

Media Statement
Significant income redistribution after tax reforms

New data indicates New Zealand’s income tax and support system continues to provide significant income redistribution, with households earning more than $150,000 a year forecast to pay 74 per cent of net income tax in 2014/15, compared with 58 per cent in 2008/09.

“Four years after the Government’s comprehensive tax reforms, latest data confirms that New Zealand’s income tax and support system significantly redistribute incomes to households in need,” Finance Minister Bill English says.

“It is now clear that higher income households are paying a larger share of income tax than they were in 2008.”

“As I’ve said previously, the Government has maintained a redistributive income tax and income support system that supports low and middle income families and helps New Zealanders through times of need. So at any particular time, a large number of households effectively don’t pay income tax,” Mr English says.

“The amount these households pay in income tax is exceeded by the amount they receive from welfare benefits, Working for Families, paid parental leave and accommodation subsidies. That’s entirely appropriate for those families genuinely in need.”

Using data from the Household Economic Survey, Treasury has updated information provided last year to include forecasts for the 2014/15 tax year.

The Treasury estimates that this year households earning over $150,000 a year – the top 15 per cent of households by income – will pay 49 per cent of income tax.

But when benefit payments, Working for Families, paid parental leave and accommodation support are taken into account, these 15 per cent of households are expected to pay 74 per cent of the net income tax. And that is before New Zealand Superannuation payments are counted.

It also excludes the impact of other aspects of the tax changes in 2010, including tightening property tax rules and compliance, and increasing GST.

By contrast, households earning under $60,000 a year – which is just under half of all households – are expected to pay 9 per cent of income tax.

“When we take income support payments into account, as a group they will actually pay no net income tax at all,” Mr English says.

“That’s because the $2.5 billion of income tax they are expected to pay will be more than offset by the $7.3 billion they will receive in income support.

“It’s appropriate to maintain a tax and income support system that helps low and middle income households when they most need it.

“But people who call for even greater transfers to low income families, or who call for the top tax rate to be raised, need to be aware of how redistributive the tax and income support system already is,” Mr English says.

“This also highlights the importance of Government policies to support people out of welfare and into work.”

Note: These figures focus on income tax and some of the main government cash transfers. The latest detailed study of Government taxation and expenditure up to 2010 shows even greater amounts of redistribution and can be found at:

http://igps.victoria.ac.nz/publications/files/2d6039de603.pdf



Click for big version.

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell:
On The Greens Proposal To Gradually Lift The Minimum Wage

Heading into the election home stretch, voters have a clear choice about the best way to help low and middle income New Zealanders. They can do so by gradually lifting the minimum wage (as the Greens propose) or by a small tax cut, as the government seems about to announce.

The minimum wage boost – by 75 cents an hour to $15 in December, and then by gradual annual increments to $18 an hour by 2017 – that the Greens are talking about is just one part of a packet of employment measures that would include scrapping youth rates and the 90 day trial period, introducing a redundancy package of four weeks, offsetting any abatement effect of the policy package for those receiving Working For Families, and finally… ditching the exception made by the government (during the Hobbit negotiations) for workers in the screen industry, which denies them normal workplace safeguards and entitlements. More>>

 

Parliament Today:

2014 General Election: Voting Period Begins

The first votes for the 2014 general election will be cast today, Wednesday 3 September, as advance voting begins ahead of election day on Saturday 20 September. More>>

ALSO:

Two Dead, One Injured: Suspect Charged After Ashburton Shooting

Russell John Tully has appeared in Christchurch District Court. Tully has been remanded in custody on charges of murder of Peg Noble and Leigh Cleveland and attempted murder of Lindy Curtis. More>>

ALSO:

John Key Press Conference: Ashburton Shootings, Judith Collins Inquiry

Prime Minister John Key has delayed the release of Nationals’ fiscal policy in light of this morning’s shooting at a Work and Income office in Ashburton... Key also answered questions about Judith Collins, and confirmed that independent inquiry will be held with regard to allegations made against Collins. More>>

ALSO:

Internet MANA: Georgina Beyer Rocks The Waka

“There is now, and always will be, a range of views about many issues within our movement and members are free to express them, but Georgina’s views on Kim Dotcom are not shared by the MANA Movement leadership or the vast majority of MANA members and supporters around the country” states MANA Candidate for Waiariki, Annette Sykes. More>>

ALSO:

IGIS Update: Inquiry Into Release Of NZSIS Information

The Inquiry would be conducted in private and individuals would appear before her separately over a period of more than a week. She does not intend to name those summoned to give evidence until her report is published. “I can confirm that all persons summoned will be required to appear under oath...” More>>

ALSO:

Gordon Campbell:
On John Key’s ‘Blame It On Judith’ Strategy

Right now, Prime Minister John Key seems intent on limiting the scope of any inquiry into his government’s dealings with Cameron Slater. The declared aim is to make that inquiry solely about Judith Collins’ behavior with respect to the Serious Fraud Office. More>>

ALSO:

Maori Council Lawyers' Statement: Supreme Court Decision On Maori Water Rights

“…the Supreme Court refused to give Pouakani people what they asked for, but may have given them something much, much better instead… the Supreme Court has questioned whether the Crown owns the River at all.” More>>

ALSO:

Gordon Campbell: On The Debate, And The Collins Accusation

Debating is a peculiar discipline in that what you say is less important than how you’re saying it. Looking poised, being articulate and staying on topic generally wins the day – and on that score, Labour leader David Cunliffe won what turned out to be a bruising encounter with Prime Minister John Key last night on TVNZ. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news