Media release

Late Tax Freedom Day Spells Cause For Concern

New Zealanders work almost a month longer than Australians to pay tax

Auckland, June 8, 2007 - Today is Tax Freedom Day¤Ã (TFD) according to leading independent accounting firm, Staples Rodway. This is the day New Zealanders will have officially paid off their tax debts and can start putting money into their own back pockets.

This year Kiwis have had to work 158 days to free themselves of tax, a week later than 2006, and only four days earlier than in 1990, which was the worst year in the 22 year history of TFD analysis.

The Staples Rodway-commissioned research shows that Kiwis are taking almost a month (27 days) longer to pay off all their taxes compared to their trans-Tasman counterparts. This is thought to be due to the combined effect of a sharp slowing in the economy together with continued strong growth in tax collections.

Roger Thompson, Staples Rodway's Tax Director in Auckland, says the research is a real cause for concern.

"From a tax perspective, Australians are financially better off than New Zealanders by almost a month, which makes it more attractive for those Kiwis thinking of moving across the ditch," he says.

The fact that many Australian wages are also higher does not bode well for the New Zealand market seeking to retain a skilled workforce. Moving up the corporate ladder here means entering an extensively higher tax bracket, and as a result, waiting longer for TFD.

"2007's Tax Freedom Day is not only significantly behind Australia but is now for the first time in almost ten years behind the UK as well. Given that Dr Cullen isn't going to address personal tax cuts until the next budget any potential fix to this deteriorating trend is even further away." Mr Thompson says.

Thompson says all the progress made in the 1990s to reduce the tax burden on New Zealand taxpayers has been completely wiped in the last five years.

"It is clear that New Zealand is going backwards. The only difference between the 1990's and this era is that we are no longer in a time of major restructuring and policy changes. We don't have those excuses now," he says.

Staples Rodway's Tax Freedom Day research - which is the only internationally benchmarked research to compare New Zealanders directly with taxpayers in Australia, the United Kingdom and the US - paints a bleak picture for New Zealand taxpayers.

Last year it took the average New Zealander 151 days to pay off their [r1]income tax, local body rates, and indirect taxes on items such as petrol, [r2]cigarettes and alcohol but this year it increased to 158 days.

According to the research, revenue from direct taxes increased this year by almost nine per cent, while indirect taxes grew by only five per cent. Company tax revenue increased over 15 per cent, while personal tax revenue increased seven per cent. The increase in taxes is much higher than the increase in the country's GDP for the period of less than four per cent.

International Tax Freedom Day Results

• The gap between Australia and New Zealand has widened significantly during the last few years. In 2000 the difference between the two countries was less than a week and as this release illustrates it is now almost four weeks.
• The latest results place Tax Freedom Day in the UK on June 4, 2007. This year is the first time since 1998 that New Zealand has fallen behind.
• America is still ahead of New Zealand by over a month, with their Tax Freedom Day falling on May 12.

* Please note that the UK and USA estimates may be slightly different to those published by the tax foundation due to differences in methodology.

Kiwis can determine their own personal Tax Freedom Day by visiting the Staples Rodway website www.staplesrodway.com and going to the Tax Freedom Day calculator.

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