New Zealanders coughing up more in tax dollars

Tax fairness has been an issue adopted by the Herald in a bid to drive public debate about an issue of fundamental importance to the economy and government finances.

New Zealanders are today celebrating what has come to be known as national Tax Freedom Day.

The unofficial event marks the day when the country has collectively paid off its tax bill for the year and can keep the remaining income, although accounting and business advisory firm Staples Rodway said this year Kiwis had paid more.

The company calculates when Tax Freedom Day will fall by analysing gross domestic product (GDP), tax revenue and tax brackets which determine how much tax individuals need to pay.

Staples Rodway director of tax Mike Rudd said Tax Freedom Day is six days later this year compared with 2016, meaning people were paying more.

The company said the total tax amount New Zealanders paid had increased by 9.5 per cent from last year, compared with a GDP increase of 5.1 per cent.

He said the higher tax bill reflected companies making higher profits and, therefore, contributing to growth in government revenue.

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

"Most of the growth in government tax revenue has come from the corporate sector. By the end of February this year, corporate tax collected was already 25 per cent higher than in the year to March 2016," he said.

"In the absence of any major tax changes 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."

Rudd said inflation pushing wages into higher tax brackets was also having an affect, saying a person earning the average national wage would be paying nearly 3 per cent more in tax than in 2011.

"Had the marginal tax brackets moved in line with wage growth, the average wage earner would have an extra $33 in their pocket per week," he said.

"That's $1700 per year or the equivalent of your daily flat white. Instead, this money has gone to central government."

Rudd said he hoped the government would consider adjusting tax brackets for inflation on a continual basis.