Taming New Zealand’s Tax Monster

New Zealanders now pay an extra $20 billion per year in tax than they did in 2000, says a new report by The Centre for Independent Studies.

In a report released today, ‘Taming New Zealand’s Tax Monster,’ Phil Rennie recommends more transparency in how politicians tax and spend.

‘New Zealand has been on an unprecedented tax and spending binge since the year 2000,’ says the report.

‘Many taxpayers are likely to be unaware of just how much tax they are paying. A worker on the average wage is now paying an extra $2400 a year in income tax than they were in 2000.’

To control this tax explosion, the report outlines some ideas to ensure stricter quality control on spending, including:

• End ‘bracket creep’. Every year tax thresholds should be adjusted to match inflation, just as benefits are.

• A review of existing spending to quantify how effective it really is.

• Sunset clauses for new programmes. If they don’t achieve results then the funding should self-destruct.

• A greater focus on outcomes (i.e. results) rather than inputs (how much is spent).

• Scrapping the annual $2 billion for ‘unallocated spending’. This slush fund is a license for politicians to spend, whether the need exists or not.

‘This extra tax has come at a high economic cost, and has delivered disappointing social benefits,” says Mr Rennie. “Therefore we should be looking at ways to stop this spiralling pattern, which is forecast to get worse over the next few years.’

Phil Rennie is a Policy Analyst with The Centre for Independent Studies.

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