Tax Freedom Day

02/06/2015

Today is Tax Freedom Day:

Today marks the first working day New Zealanders stop working for the Government and take home what they earn. According to the OECD, New Zealand’s government outlays as a percentage of GDP is 41.4% this year, making the 2015 ‘Tax Freedom Day’ fall on Queens Birthday Monday. Last year Tax Freedom Day was four days later, on 4 June.

Taxpayers’ Union Spokesman, Ben Craven, says:

“Today is the day where taxpayers begin working for themselves rather than working to support the burden of Government.”

“While 2015 Tax Freedom Day for New Zealand is earlier than it was in 2014, total Government outlays as a percentage of GDP remain higher than the OECD average.”

“Despite the positive trend, there is still a long way to go before this Government returns to the earlier Tax Freedom Days enjoyed under the last Labour Government. We should be aiming to have paid off all of our taxes by April, not having to slave away for politicians into June.”

“While the Government is doing a reasonable job of managing the books, the growth of local government spending appears to be squandering most of the efforts to trim back the tax burden.”

OECD data on government outlays as a percentage of GDP can be found here (Annex Table 25). . .

Four days earlier than last year – we’re going in the right direction but need to keep moving that way and moving faster.


Quote of the day

07/05/2015
For those who aspire to live in a high cost, high tax, big government place, our nation and the world offers plenty of options. Vermont, Canada and Venezuela all offer you the opportunity to live in the socialist, big government paradise you long for.  – Marco Rubio

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.

 

 


CGT death duty in drag

04/09/2014

Larry Williams interviewed David Cunliffe on Labour’s capital gains tax yesterday and established that it will be complicated and arbitrary.

One example of that is managed funds.

KiwiSaver managed funds will be exempt but anyone owning exactly the same shares in a managed fund will be taxed.

The Taxpayers’ Union highlights another aspect that Labour has not – a CGT will be a death duty in drag:

Responding to confirmation that under Labour’s capital gains tax policy children would have to pay the tax if they sold a family home after both parents have passed, Ben Craven, Spokesman for the Taxpayers’ Union, says:

“Labour’s capital gains tax is looking more and more like a death duty in drag. The vast majority of estates are liquidated, even where the family home is in a trust to the children.”

“The last time death duty existed in New Zealand was 1992. It appears that Labour are looking to reintroduce it but under another name with far more complexity. When children lose their parents they should be encouraged to put the inheritance to good use. Instead, Labour’s policy would whack them with a tax bill.”

“If Mr Cunliffe’s comments to media are correct, his policy will create a cruel tax incentive to quickly sell the family home while parents are still on their death beds. Mr Cunliffe’s statements to the media must be mistaken, or Labour really haven’t thought this one through.”

The tax won’t be levied if the house is sold in 30 days but few estates are settled and houses sold that quickly.

CGT wouldn’t be imposed if a family member lives in the house but that doesn’t happen very often.

When it does, unless it’s an only child, it’s usual for only one beneficiary to buy the shares of other family members and those gains would be taxed.

 


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