Bottom decile better off now than under Labour

Expected Income Redistribution

Steven Joyce pointed out:

New data from the Treasury shows that income redistribution across New Zealand’s income tax and support system continues to increase, with the top 10 per cent of households forecast to pay 37.2 per cent of income tax in 2016/17, compared with 35.5 per cent in 2007/08.

“This latest data confirms that New Zealand’s income tax and support system significantly redistribute incomes to households in need,” Acting Finance Minister Steven Joyce says.

“Higher income households are paying a larger share of income tax than they were in 2008, and lower income households are paying less – the 30 per cent of households with the lowest incomes are forecast to pay just 5.4 per cent of income tax, compared with 6.3 per cent in 2007/08.

Labour keep trying to portray NZ as having got more unequal but the truth is that we have a highly redistributive tax and welfare system.

Here’s how things have changed for the bottom decile from Labour’s last year to the current one:

• Tax has dropped from $372 million to $313 million
• Welfare payments increased from $2,246 million to $2,748 million
• Net tax gone from -$1.88 billion to -$2.44 billion

And here’s how things have changed for the top decile:

• Tax has increased from $9.4 billion to $11.6 billion
• Share of tax gone from 35.5% to 37.2%

So the next time Labour say the Government is waging a war on the poor, recall that in fact the bottom decile are receiving more in state support and the top decile paying more in tax.

Personally I’d like to see tax rates drop across the board now we are back in surplus.