NZ’s Tax Freedom Day has arrived 6 days later this year – but is paying tax so bad? – Stuff.co.nz

ROB STOCK

Last updated14:44, May 8 2017

STAPLES RODWAY

Tax Freedom Day has fallen six days later than it did last year, according to the accountants who calculate it.

Each year Staples Rodway works out the day when New Zealanders have "collectively paid off theirtaxbill for the year and can keep the rest of their income for themselves".

It does itby analysing GDP,taxrevenue and currenttax brackets, and concluded that people were effectively paying moretaxthan they did in 2016.

"The total amount Kiwis paid intaxeshas increased by 9.5 per cent year-on-year, more than double the increase of last year, alongside a 5.1 per cent increase in nominal GDP," said Staples Rodway's Mike Rudd.

READ MORE: *KiwiSavers 'harshly' taxed compared to property investors, book claims *Tax freedom day falls again

While things like council rates have been rising in many areas, the increase in the tax take was largely explained byrising corporate profits, and hence the tax companies paid.

STAPLES RODWAY

Mike Rudd, tax expert from Staples Rodway, says the country is paying more tax this year than last.

"Our methodology shows the true impact of the government on your back pocket each year," said Rudd.

"Most of the growth in governmenttaxrevenue has come from the corporate sector.

"By the end of February this year, corporatetaxcollected was already 25 per cent higher than in the year to March 2016. In the absence of any majortaxchanges in the last year, this can only be a sign of a well performing New Zealand economy in spite of uncertainty on the global horizon."

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Let's talk about tax, baby! It's the word on everyone's lips with Tax Freedom Day, and the launch of a popular book on tax fairness falling on the same day.

"Bracket creep" was also having an impact as rising wages resultedin people moving into higher tax brackets.

A person earning the average national wage was paying nearly 3per cent more intaxthan they did in 2011, said Rudd.

"Had the marginaltaxbrackets moved in line with wage growth, the average wage earner would have an extra $33 in their pocket per week."

Tax Freedom Day can shift a great deal, depending on who occupies the Beehive. In 2008, Staples Rodway declared May 21 was Tax Freedom Day.

In 2012, it fell onApril 27.

SUPPLIED

Deborah Russell is one of the co-authors of Tax and Fairness published by BWB Texts.

ACT leader David Seymour the taxpayer was "persecuted" under the current government.

"I thought getting rid of the socialists in 2008 meant happy days for taxpayers, but today's setback leaves us in a crappy haze," he said.

"In just one year, New Zealanders have lost an extra week to the government."

Tax Freedom Day falls on the same day that a new book on tax fairness was published by BWB Texts authored by tax experts Terry Baucher and Deborah Russell.

In Tax and Fairness they call for a system that taxes income and wealth gains more consistently, as currently wealthy people can earn a lot of their annual increases in wealth from capital gains, which are often not taxed at all.

Baucher and Russelloppose the demonisation of tax.

"We need to understand taxation as the price we pay for a civilised society. It is not an unjustified impost from a tyrannical government, as libertarians argue; it is the contribution we choose to make through our democratic institutions ensuring that each of us is enabled to flourish, and live a good life," Russell and Bauchersaid.

"Proudly paying our taxes is a sign that we believe in our own capacity to create a flourishing society that gives all New Zealanders fair opportunities. We should smile when we pay our taxes."

Rudd said tax freedom days were calculated in many countries around the world, and the New Zealand date sat around the middle of the pack.

Everyone's individual tax freedom day would vary. For property investors, for example, it "probably would be a lot earlier," Rudd said.

"We are hearing that the government is considering providing some relief to the taxpayer in this year's Budget to be delivered on May 25," Rudd said. "Our hope is that this will include adjustingtaxbrackets to account for inflation over the past nine years since the last adjustment."

-Stuff

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NZ's Tax Freedom Day has arrived 6 days later this year - but is paying tax so bad? - Stuff.co.nz