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Tax take reflects economic growth

18 October 2006

Tax take reflects economic growth

Latest OECD figures showing a rise in the tax-to-GDP ratio for a majority of countries underscore the strength of world economic growth in recent years, Finance Minister Michael Cullen said today.

New Zealand's total tax revenue as a percentage of GDP rose from 35.6 per cent in 2004 to 36.6 per cent in 2005 according to the OECD's calculation.

2004 is the last year when complete data across the OECD is available. New Zealand was ranked 19th highest in 2003 and 15th in 2004 out of 30 OECD countries.

"The tax-to-GDP ratio increased in 17 out of 24 countries for which provisional figures for 2005 are available and fell in only five countries.

"As the OECD notes, "the increases seem to be mainly due to higher incomes and profits, thanks to stronger economic growth, rather than to higher tax rates."

"New Zealand has been one of the top performing countries in the OECD in recent years so the results are not surprising.

"John Key is playing fast and loose with the facts once again. I don't see him criticising the economic policy of the United States when it, along with Iceland and the United Kingdom, experienced the largest tax ratio rise."


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