Income tax in New Zealand lowest in OECD

Kiwi workers pay the second lowest tax on their income in the OECD. Photo / NZME

The average single worker in New Zealand pays the second lowest amount of tax in a comparison against similarly wealthy countries.

Single workers in New Zealand face taxes of 17.6 per cent in 2015, compared with the OECD average of 35.9 per cent.

The publication on income tax in OECD countries calculates a "tax wedge" - the amount of tax on wages including social security contributions to the Government, including family benefits and tax provisions.

It does not include indirect taxes such as GST.

The highest average tax burdens for childless single workers earning the average national wage were in Belgium (55.3 per cent), Austria (49.5 per cent), Germany (49.4 per cent) and Hungary (49 per cent). The lowest were in Chile (7 per cent), New Zealand (17.6 per cent) and Mexico (19.7 per cent).

In New Zealand, income tax accounts for the whole tax wedge for single workers, while most of the other countries in the OECD require compulsory social security contributions to schemes operating within the Government sector.

Child-related benefits and tax provisions tend to reduce the tax wedge for workers with children compared with the average single worker.

The average married New Zealand couple with two children and one income pays the least amount of tax in the OECD when family benefits are taken into consideration.

The OECD average tax wedge for a married couple on a single income with two children is 26.7 per cent.

Average single workers in New Zealand are paying less tax in 2015 than they were in 2000.

Income tax decreased by 1.8 percentage points from 19.4 per cent to 17.6 per cent between 2000 and 2015. During the same period, the average tax wedge across the OECD decreased by 0.7 percentage points from 36.6 per cent to 35.9 per cent.

The report doesn't take into consideration GST.