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

 

PARLIAMENT TODAY:

Flyover Over: NZTA Not Appealing Flyover Decision

The NZ Transport Agency has decided not to appeal the High Court’s Basin Bridge decision, and says the High Court’s findings provide valuable clarity to help guide the development of future infrastructure projects throughout the country. More>>

ALSO:

Developing Crown Land: Government, Auckland Iwi Reach Agreement

The government has reached agreement with Ngati Whatua and other Auckland iwi over developing 500 hectares of excess land in Auckland for private housing which had been under High Court challenge. More>>

ALSO:

Gordon Campbell: On Maurice Williamson

Maurice Williamson seems to have been granted an annual licence to embarrass the National Party, and its that time of year again. Also as per usual, Williamson’s recent exercise in sexism and homophobia has passed by with barely a murmur from his leader. More>>

ALSO:

Green Climate Plan: Shaw Launches 40% Emission Cut Target

Green Party co-leader James Shaw has announced an emissions target initiative for 40% reduction by 2030. He said agriculture has to long been used as a reason for inaction, a roadblock to action... He proposed a tax of 8 cents per kilo of milk. More>>

ALSO:


Images & Video: Four Alternative Flags For Referendum

Flag Consideration Panel chair, Professor John Burrows, said the Panel’s decision had been guided first and foremost by the results of its engagement programme across a range of communities where thousands of Kiwis shared what was special about New Zealand, as well as the Panel’s own selection criteria. More>>

ALSO:

Transport Report: LGNZ Calls For Proactive Approach To Mobilise Regions

LGNZ has today released Mobilising the Regions, its major transport study, which highlights the economic and social impact of strategic transport decisions nationally and in the regions, and the direct link between regional development, national prosperity, social well-being and cohesiveness. More>>

ALSO:

Transport: New Rules Bring Double-Deckers To Our Cities

New rules that allow buses, including double-deckers, to carry more people will ramp up the public transport offering in our cities, Transport Minister Simon Bridges and Associate Transport Minister Craig Foss say. More>>

ALSO:

Cycling:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news