[GeorgeM]

The Economist 22nd Oct has comparative figures for the government tax take as a percentage of GDP.

Top was Sweden with 50%, lowest US and Japan with approx 25%.

NZ and the UK were virtually identical at about 35% with NZ's bar on the graph being ever so slightly below the UK.

The Euro zone average was about 40%

So I suppose that if you come to NZ from most of Europe you'll think that we're not taxed that much here, but if you come from the US or Japan you'll feel a bit ripped off.

If you come from the UK it'll probably depend on your personal circumstances whether you feel better or worse off.

[StevieD]

Thanks George, very interesting!

[clg]

Here is lots of info if you want to compare NZ to the rest of the world

http://www.stats.govt.nz/NR/rdonlyres/3526CCF7-E047-47D5-9B80-27C137E068C6/0/NZintheOECD.pdf

[Avalon]

Tax free day is only one week earlier here than in the UK, which depressed us no end I can tell you!

However we certainly "feel" less burdened by tax here. I really have no idea why that is.

Our big problem with the tax system here is this silly Fringe Benefit Tax which really dumps on workers. Just a pet peeve.

[GeorgeM]

Our big problem with the tax system here is this silly Fringe Benefit Tax which really dumps on workers. Just a pet peeve.
Not having any fringe benefits (:wah ) I'm not entirely up to speed on this, but I thought that this was introduced comparatively recently and just brought NZ into line with places like the UK.

Certainly in the UK you're taxed on any benefit in kind as part of your income tax - for example if you get a company car you're judged for tax purposes to have received the equivalent in cash of 35% of the list value of the car (plus the full cost of any extras) per annum. Hence if a car has a list price of 20,000 your assumed income would be enhanced by 7,000 per annum in recognition of this, and if you pay tax at 40% you would end up handing over an extra 2,800 to Mr Brown and his cronies. At least that's how I understand it - perhaps someone can confirm/deny.

[foolsgold99]

Tax here seems to be very honest and transparent. There aren't a lot of hidden taxes, for instance there is no tax on the purchase of a house, in the UK he had to pay thousands of pounds to the goverment just for the privalege of spending our own money.

Here it's all up front

[Avalon]

George -

Yes you are right as far as the UK goes (so you have to work out whether its better for you or not). In our case - a compoany car was a godsend. OH now has the joy of actually having to PAY to get the car serviced and get new tyres! (Part of me finds this "amusing" as Ive always had to do this!).

The difference here is that the COMPANY has to pay the fringe benefit tax, as well as the employee having to pay tax on the cash value. And strangley enough - the companies wont pay up. In practice - this means that there are very few benefits for most workers - which included contributions to pensions, healthcare, travel and a host of stuff that many UK employees take for granted. (Im one of the few who never got that stuff anyway).

Its a pretty harsh stand from what i can see - its not as if workers are given much in teh way of pay or annual leave here instead.

Foolsgold -

I think thats probably why we dont feel so hard done by here. You are taxed primarily on Income - its all above board. The principle here seems to be mainly Tax on Earnings, not on spending it (excpet GST) or when you die!

My only real beef with the system is that there is no "Tax free allowance" for low earners, which I think Is unfair. Though someone managed to explain to me that in fact it works out that low income earners in teh UK still have a proprtionatley high tax burden despite the allowance. (I cant rememebr the explaination though)

[GeorgeM]

The difference here is that the COMPANY has to pay the fringe benefit tax, as well as the employee having to pay tax on the cash value.
I didn't realise that FBT was in addition to the employee paying tax on the cash value, I thought it was instead of! Oops! I might just stop hassling quite so loundly that it was time that I was given a company car :) .

[Glenda]

My only real beef with the system is that there is no "Tax free allowance" for low earners, which I think Is unfair. Though someone managed to explain to me that in fact it works out that low income earners in teh UK still have a proprtionatley high tax burden despite the allowance. (I cant rememebr the explaination though)

It is particularly unfair that your children to have to pay tax too, on their savings. :mad:

[GeorgeM]

It is particularly unfair that your children to have to pay tax too, on their savings. :mad:
I think that it's unfair that any of us should have to pay tax on our savings. For the vast majority of us this has come from earned income which we've already been taxed on anyway.

They moan that the great unwashed don't save enough, but taxing the (often fairly poor) returns is a distinct disincentive, if you ask me.

[Paul]

George -

Yes you are right as far as the UK goes (so you have to work out whether its better for you or not). In our case - a compoany car was a godsend. OH now has the joy of actually having to PAY to get the car serviced and get new tyres! (Part of me finds this "amusing" as Ive always had to do this!).

The difference here is that the COMPANY has to pay the fringe benefit tax, as well as the employee having to pay tax on the cash value. And strangley enough - the companies wont pay up. In practice - this means that there are very few benefits for most workers - which included contributions to pensions, healthcare, travel and a host of stuff that many UK employees take for granted. (Im one of the few who never got that stuff anyway).

Its a pretty harsh stand from what i can see - its not as if workers are given much in teh way of pay or annual leave here instead.

Foolsgold -

I think thats probably why we dont feel so hard done by here. You are taxed primarily on Income - its all above board. The principle here seems to be mainly Tax on Earnings, not on spending it (excpet GST) or when you die!

My only real beef with the system is that there is no "Tax free allowance" for low earners, which I think Is unfair. Though someone managed to explain to me that in fact it works out that low income earners in teh UK still have a proprtionatley high tax burden despite the allowance. (I cant rememebr the explaination though)

Company car in UK you will pay UPTO 35% depending to emmisions a slight difference which is why the new Euro IV diesels etc are so popular (low emmssions = lower tax %age charge)


As far as I can see from the two tax systems, lower earners in the UK may well get their tax free allowance of roughly £5000 pa like everyone here, BUT as soon as you go over this limit it is not very long before you are paying 33% tax/NI i.e. someone earning 15k pa will be paying a proportion of his income at 33% tax whereas in NZ I believe they would only be paying 19% tax (no NI) albeit on all of their earnings - potentially noticeable difference on someone earning a salary in that range.

However for very low earners they would almost certainly be better off in UK tax wise because of the annual allowance

Obviously someone in the UK would possibly be entitled to various tax credits however which may make up any difference.

I don't think there is a great deal to choose beteween the direct taxation it seems to be that NZ is much more favourable for less indirect taxation i.e stamp duty, IHT, elements of VAT/GST

:nice1

[Paul]

I think that it's unfair that any of us should have to pay tax on our savings. For the vast majority of us this has come from earned income which we've already been taxed on anyway.

They moan that the great unwashed don't save enough, but taxing the (often fairly poor) returns is a distinct disincentive, if you ask me.

Wow that is poor that children get taxed on savings :no

AS far as the rest of us paying tax on interest earned, well don't really see the difference between that and being taxed on your salary personally. You are not being taxed on your savings (which I agree has already been taxed once), you are being taxed on the profit those savings make you - a big difference IMO

The one I really do not agree with is Inheritance Tax as this is double taxation as its worst IMO (don't even get me started on stamp duty.........!!!)

[Avalon]

George -
If you are even thinking of a company car here - make sure it is Fully Expensed - Ie comes with a Fuel card. Still taxable - but with fuel oly getting more expensive it might be a winner for you (and the company might swing for that if they wont go for a car). We have one and we are doing quite well out of it so far.

Tax on savings I also dont aggree with. Lets face it - governments are constantly banging on at us to save, but then they want a chunk of what we nange to squirrel away. The only way round it is to pay of your mortgage early (as far as I can see).

[bob_the_engineer]

Hi GeorgeM, I read this



NZ and the UK were virtually identical at about 35% with NZ's bar on the graph being ever so slightly below the UK.

.

then I did this :laugh :laugh :laugh

I’m not wealthy, I don’t earn a huge amount, but like many I don’t qualify for tax breaks.

I own a house (or rather a mortgage) a car and have a couple of bad habits (pint of beer and a cig) and I think the figure for the UK should be at least double that published.

I read another interesting article a few days ago in the mail, it was all about the UK’s number 1 export. Graduates, Engineering, Science, Medical and many other professions. A large part of this was blamed on the unfair taxes.

Bob

[foolsgold99]

The one I really do not agree with is Inheritance Tax as this is double taxation as its worst IMO (don't even get me started on stamp duty.........!!!)


The purpose of inheritance tax was to prevent the creation of a ruling class the rich, it helps ensure that opertunity it spread through all levels of society.

I'm ok with it as a concept, but there should be high thresholds (1 milion +) before it kicks in.

don't think we have it in NZ though...................