Executive summary

• New Zealand’s level of tax is less than the OECD average (as a percentage of GDP) but higher than some of the country groupings considered in this paper. High taxes in “Other Western Europe” push up the OECD average.
• New Zealand has a greater proportion of its taxes collected by central government than is the case in most OECD countries. All levels of government should be included when making international tax comparisons.
• New Zealand’s distribution of taxation among the different broad types of tax (for example, income tax and taxes on goods and services) is fairly average. New Zealand and Australia are the only two countries with no social security fund taxes.
• A higher proportion of New Zealand’s income tax is charged on personal (rather than corporate) income than is the case in all OECD countries but one.
• New Zealand’s tax rates on personal income are relatively low. Its top marginal tax rate is the lowest in the OECD. The top rate applying to the average worker is the 13th lowest out of 29. The total tax paid by the average worker as a percentage of his/her total wages is the 9th lowest.
• Personal income taxes in New Zealand are more neutral among different groups of people than is the case with many OECD countries. The tax system is less likely to favour people on lower incomes at the expense of those on higher incomes, nor married couples with children at the expense of single people.
• New Zealand’s top marginal tax rate on corporate income is slightly lower than the OECD average.
• Of all OECD countries, New Zealand has the largest proportion of its taxes on goods and services made up by value-added tax (GST). New Zealand’s GST rate is less than that for most OECD countries, but it does not have any concessionary rates and there are fewer exemptions than elsewhere.