Thursday, October 24, 2013

12% of us prop up 76% of all spending.....

Bill English released some figures this week which certainly show who bears the greatest tax burden in New Zealand.
Finance Minister Bill English says lower income households are paying a smaller proportion of net income tax than they did in 2008, indicating that the tax system has become more progressive since the Government’s tax changes in 2010.
“This should contribute to improvements in income equality in New Zealand, contrary to the Opposition’s completely false claims that lower income households were disadvantaged by the tax changes,” he says.
“Estimates of net income tax, as paid by income bands, indicate the tax system has become more progressive since 2010.”
In particular:
  • Households earning less than $60,000 a year, which total around half of all households, are generally expected to pay less in percentage terms towards total net tax in 2013/14 than they were paying in 2008/09.
  • Conversely, households earning more than $150,000 a year – that is, the top 12 per cent of households by income – are generally expected to pay more of the total net tax than they were paying in 2008/09.
  • And only 6 per cent of individual taxpayers earn over $100,000 a year, yet they pay 37 per cent of total income tax. This has increased from the 2010/11 tax year, when those taxpayers paid 29 per cent of total income tax.
Mr English says this raises questions about Opposition calls for the top tax rate to be increased.
“They need to explain to New Zealanders why that should happen when higher-income households are already paying a larger share of total net tax, since the Government’s tax changes three years ago.
“At any particular time, a large number of households effectively don’t pay tax.
“The income tax paid by these households is exceeded by the amount they receive from welfare benefits, Working for Families, paid parental leave and accommodation subsidies.” So 12% of taxpayers are funding 76% of the net income tax take.

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