Abstract:
New Zealand relies more heavily on revenue from personal income tax and from corporate tax than all other OECD countries except Australia and Denmark. In New Zealand, the personal income tax share of total tax collected is nearly two-thirds higher than the OECD average. Given that New Zealand has the largest diaspora of skilled workers in the OECD, the degree of reliance on the personal tax base is concerning. The fact that New Zealand collects one and a half times as much of its total tax rom corporate tax as the average OECD country is also of concern, given the mobility of the corporate tax base. Many taxpayers do not pay any income tax and many middle-income earners are paying tax at effective marginal tax rates of between 55 percent and 90 percent because of the way social assistance is delivered. In this article, the author exampines the sustainability of the New Zealand tax system in an era of globalisation and freedom of movement within Australasia and asks whether radical reform of the tax system is required. The author also considers some of the options for reform.
