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Summary
- May 11 is the Tax Freedom Day for New Zealand.
- The date is calculated every year by a business accountancy firm.
- It is a day when taxpayers have paid their annual taxes fully and can keep every dollar for themselves for the remaining year.
May 11 is marked as the Tax Freedom Day for New Zealand. It is a hypothetical day, on which Kiwis have made full payment of their annual taxes and get to keep every dollar for themselves for the remaining part of the year.
This day has fallen on May 11 in 2021, two days before than it fell in 2020, while 2 days later than in 2019.
Source: © Moth | Megapixl.com
Baker Tilly Staples Rodway, a business accounting firm, calculates the date for the Tax Freedom Day in New Zealand every year.
The firm’s calculations reflected some observations about coronavirus pandemic’s behavior, as well as the global turmoil, which devastated economies and disturbed the office culture. The day considers tax payments made to the central and local governments against Gross Domestic Product (GDP).
The calculations also reveal the actual effect of New Zealand’s tax policies on Kiwis’ pockets compared to its trading partners.
Tax Take of NZ stayed resilient
Tax Director Mike Rudd stated that the computations indicated that New Zealand's tax take was resistant notwithstanding the uncertainty of an entire year of lockdowns. New Zealand is being able to pay about the same proportion of tax as was done in a good year despite foreign trade being greatly affected by COVID-19, supply-chain challenges, and closures.
This is partly attributed to the government’s wage subsidies and other business incentives, which have helped Kiwis in keeping their jobs.
Tax Freedom Day fell in late May in early 2000s. The date had shifted to about 2 weeks before that showed that the collective tax bill was lesser.
- The amount of petrol taxes raised in October was roughly 50% higher than the previous year and a similar increase was seen in January.
- Alcohol tax rose by about 20% in the August-December period even though certain locations in Auckland and bottle stores were closed for a month.
- The tobacco tax was down by about 33% for the whole year.
- The corporate tax income in April 2020 was 83% lower than the previous year, but provisional tax collections had risen to 41% higher by September.
Tax Freedom Day to come later in the future
This day had fallen on May 9 in 2019 and May 8 in 2017.
As per Rudd, the increase in days at that time was primarily due to the fact that salaries had risen but tax rates had not. He predicted it would be later next year, and then later in the years after that, as the government attempted to recover money lent to pay for the COVID-19 response.
Increased taxes, such as the latest adoption of a 39% top tax rate and expansion of the bright line test, and a reduction of what may be withheld from income, such as the elimination of interest tax deductibility from residential rental property income, are some of the possible outcomes.
