By one calculation, today is Tax Freedom Day:
Staples Rodway says tax system needs to be more responsive to economic growth
This year’s Tax Freedom Day – the notional day of the year when New Zealand taxpayers stop paying tax and start earning for themselves – is May 7th, two days later than 2014 and four days later than 2013.
National accounting firm Staples Rodway, which is behind the Tax Freedom Day calculations, says while Kiwi companies and individuals are paying more tax, it’s not necessarily all bad news.
Staples Rodway Auckland Managing Director David Searle says: “The key driver of the growing tax take in recent years has been New Zealand’s post-global financial crisis economic recovery. As the economy has recovered, companies are growing and paying more tax, and people are spending more and therefore paying more GST.”
Mr Searle also pointed to ‘bracket creep’, which occurs when workers move into a higher tax bracket as their wages grow, as a reason for people paying more tax. . .
However, the Taxpayers’ Union says this annoucnement is premature:
“We are delighted that others have picked up our initiative from last year,” says Taxpayers’ Union spokesman Ben Craven. “Unfortunately this version by Staples Rodway doesn’t factor in local government nor public spending funded by borrowing.”
“Using the OECD measure gives a more accurate reflection on how long New Zealanders work for the government and allows for comparison with other countries. The current burden of government is 41.4% of GDP. For comparison Australia’s is only 36.1%.”
“This year tax freedom day is Sunday May 31, representing the 41.4% of the economy that is spent by the government. Last year’s tax freedom day was on June 4.”
That is four days earlier than last year which is a small move in the right direction but a bigger move is needed.