Experts differ on timing of Tax Freedom Day
But they agree the tax burden is increasing.
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A methodological row has broken out over the calculation of when taxpayers stop working for the government and keep their earnings for themselves.
Accountancy firm Staples Rodway says its analysis of GDP, tax revenue and tax brackets means Tax Freedom Day occurred on May 8, six days later than in 2016.
The Taxpayers’ Union uses different calculations and says Tax Freedom Day won’t be until May 22, three days before this year’s budget announcements.
Both agree Kiwis’ tax burden is increasing and that it is taking longer to pay off financial commitments to the government each year.
"The total amount Kiwis paid in taxes has increased 9.5% year-on-year, more than double the increase of last year, alongside a 5.1% increase in nominal GDP," Staples Rodway tax partner Mike Rudd says.
The Taxpayers’ Union cites the OECD’s Total Government Outlays as a proportion of the economy as a better measure of the burden of government.
“This version by Staples Rodway doesn’t factor in public spending funded by borrowing and other revenue means,” executive director Jordan Williams says.
“Monday, May 22, represents the 39.1% of the economy that is spent by the government. For comparison, Australia’s is only 36.1%.”
The Sydney-based Centre for Independent Studies says Australia’s Tax Freedom Day was on April 13.
"It has taken 102 days for Australians to pay off this year's annual tax burden," CIS economist Michael Potter says.
"The average Australian has sacrificed $A19,200 to pay for government services at all levels – federal, state and local.”
Mr Williams says the increased tax burden is due to the government failing to adjust income tax thresholds to match average changes in earnings.
“The proportion of tax Kiwis are paying on their income continues to grow,” he says.
The union has laid out five options of how the government can deliver tax relief.
Earlier reports on Tax Freedom Day show it occurred as late as May 24 in 2005, according to Staples Rodway.
NEVIL GIBSON
Tue, 09 May 2017
Tue, 09 May 2017
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Experts differ on timing of Tax Freedom Day
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