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NZ Tax System Least Family Friendly in OECD

CHNZ Media Release - 31 March 2005

NZ Tax System Least Family Friendly in OECD

New Zealand has one of the least family-friendly tax and benefit systems in the OECD according to a report released this month. *

The OECD report “Taxing Wages 2003/2004” compared the net tax burden experienced by singles without children against the net tax burden carried by married one-earner couples with children. It found that in nearly all the 30 countries surveyed, the tax and benefit systems operated in a way that ensured net tax burden on married one-earner families was significantly lower than that for singles. However New Zealand was one of only three countries where this was not the case. Instead in New Zealand (along with Turkey and Greece) the net tax burden on such families was exactly the same as single earners with no dependents. Commenting on the report, Christian Heritage NZ leader Ewen McQueen said,

“It is clear that nearly every other government in the OECD realises that married couples who choose to have an at-home parent caring for their own children deserve to have some form of tax relief. Unfortunately in New Zealand the ethos driving public policy is that we must push all parents of young children into the workforce. This is short-sighted and fails to recognise the proven benefits that accrue to children who are cared for by an at-home parent in their early years.”

The CHNZ leader also noted that many of the OECD countries that were offering relief to families were doing so because they recognised that with an ageing population and falling birth-rate they were facing serious long term problems. The support they were offering to families was thus part of a wider strategy to encourage couples to have more children. He said,

“Countries like Germany, Ireland and Australia recognise that encouraging married couples to have children is actually an investment in the future of the nation. They also recognise that one of the best ways to achieve this is to help such couples to care for their own children at home.”

McQueen noted that Christian Heritage NZ policy included income-splitting for married couples and a home-carers allowance for couples with an at-home parent caring for children under five.

* www.oecd.org/dataoecd/33/28/34545117.pdf ( attached - refer last page - Chart 1.2 )

* http://www.oecd.org/document/49/0,2340,en_2649_201185_30481201_1_1_1_1,00.html

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