Tax and Transfer Progressivity in New Zealand: Part 1 Methodology

Benjamin Ching

Treasury Analytical Notes Series from New Zealand Treasury

Abstract: This note is the first in a two-part series that seeks to improve our understanding of effective average tax rates (EATRs) in New Zealand. EATRs measure the net effect of taxes and transfers as a proportion of a taxpayer’s income. Measuring EATRs can provide insight into some important questions with implications for the fairness and efficiency of the tax and transfer system: Who pays tax and who receives transfer payments? How much do they pay or receive? Where might taxes and transfers distort decisions to save and invest? This series focusses on the first two questions and what EATRs can tell us about progressivity (defined as having higher tax rates and lower transfer rates for higher levels of income or wealth). Measuring EATRs can also help us to identify tax distortions caused by the inconsistent tax treatment of different types of income. Such distortions can create allocative inefficiencies and reduce productivity.

JEL-codes: C81 D31 E21 H24 H71 I38 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2023-04-26
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (1)

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