Tax Base Needs To Be Broadened
New Zealand's tax base needs to be broadened, Alliance leader Jim Anderton told an audience of superannuation fund managers in Wellington today.
'New Zealand stands out from all other OECD countries for the proportion of taxation revenue contributed by individual income.
In other words, our wage and salary earners are carrying a far higher proportion of the overall tax burden than wage and salary earners in other developed countries,' Jim Anderton said.
'Our overall taxation levels are lower than the OECD a verage, but the proportion of Government revenue in New Zealand which comes from income tax is much higher than elsewhere.
'OECD figures put the proportion of total Government revenue raised from income tax in New Zealand at 60.6% - higher than for any other OECD country.
Only two other countries, Denmark and Australia, depended on income tax for more than 50% of total Government revenue.
'At the same time, overall levels of tax are significantly lower than OECD and Euro! pean Community averages and well behind levels in countries such as the UK and Germany.
'The apparent paradox is explained by the virtual absence of any taxes on wealth.
We are almost unique for the absence of wealth taxes.
Wealth taxes make a double figure contribution to overall Government revenue in countries like the US, the UK and even Australia.
'Jim Anderton said it was clear that the tax base needed to be broadened.
'There are lessons for the Alliance, too, as we prepare to announce our tax policy f or the next election.
If we want to raise the revenue to pay for a better health system, to remove tertiary fees and to invest in jobs, then we can't do it by simply increasing tax on middle New Zealand.
'Make no mistake, the Alliance is still committed to progressive taxation.
People on million dollar salaries, like Telecom chief executive Rod Deane, can afford to pay more tax and they will.
He doesn't need Bill English's tax cut.
'But the government's revenue shoul! d be coming from a much broader base, including both income! s and wealth.
When jobs are a priority and the balance of payments is in crisis, raising revenue through tariffs seems to be a better source of revenue than steep tax increases on ordinary households.