The opposition fought National’s tax cuts tooth and nail and keep saying they help the rich and hurt the poor.
New data indicates New Zealand’s income tax and support system continues to provide significant income redistribution, with households earning more than $150,000 a year forecast to pay 74 per cent of net income tax in 2014/15, compared with 58 per cent in 2008/09.
“Four years after the Government’s comprehensive tax reforms, latest data confirms that New Zealand’s income tax and support system significantly redistribute incomes to households in need,” Finance Minister Bill English says.
“It is now clear that higher income households are paying a larger share of income tax than they were in 2008.”
“As I’ve said previously, the Government has maintained a redistributive income tax and income support system that supports low and middle income families and helps New Zealanders through times of need. So at any particular time, a large number of households effectively don’t pay income tax,” Mr English says.
“The amount these households pay in income tax is exceeded by the amount they receive from welfare benefits, Working for Families, paid parental leave and accommodation subsidies. That’s entirely appropriate for those families genuinely in need.”
Using data from the Household Economic Survey, Treasury has updated information provided last year to include forecasts for the 2014/15 tax year.
The Treasury estimates that this year households earning over $150,000 a year – the top 15 per cent of households by income – will pay 49 per cent of income tax.
But when benefit payments, Working for Families, paid parental leave and accommodation support are taken into account, these 15 per cent of households are expected to pay 74 per cent of the net income tax. And that is before New Zealand Superannuation payments are counted.
It also excludes the impact of other aspects of the tax changes in 2010, including tightening property tax rules and compliance, and increasing GST.
By contrast, households earning under $60,000 a year – which is just under half of all households – are expected to pay 9 per cent of income tax.
“When we take income support payments into account, as a group they will actually pay no net income tax at all,” Mr English says.
“That’s because the $2.5 billion of income tax they are expected to pay will be more than offset by the $7.3 billion they will receive in income support.
“It’s appropriate to maintain a tax and income support system that helps low and middle income households when they most need it.
“But people who call for even greater transfers to low income families, or who call for the top tax rate to be raised, need to be aware of how redistributive the tax and income support system already is,” Mr English says.
“This also highlights the importance of Government policies to support people out of welfare and into work.”
The left’s answer to many problems is to throw more money at them.
That’s other people’s money and their favourite source of that is the wealthy who, they say, should pay more tax.
These figures show the wealthy are already paying most income tax, families on lower income are paying no net income tax and households on less than $60,000 are paying just 9%.