 Can fiscal drag pay for the public spending effects of population ageing in New Zealand?John Creedy and Norman Gemmell New Zealand Economic Papers, 2014, vol. 48, issue 2, 183-195 Abstract: This paper examines the extent to which projected aggregate tax revenue changes, in association with population ageing over the next 50 years, can be expected to finance expected increases in social welfare expenditures. Projections from two separate models, dealing with social expenditures and income tax and GST revenue, are used. The results suggest that the modest required increase in the overall average tax rate projected over the next 50 years can be achieved automatically by adjusting income tax thresholds using an index of prices rather than wages. Based on evidence about the New Zealand tax system over the last 50 years, comparisons of average and marginal tax rates suggest that such an increase may be feasible and affordable. The paper discusses the range of considerations involved in deciding if this automatic increase in the aggregate average tax rate, via real fiscal drag of personal income taxes, is desirable compared with alternative fiscal policy changes. Date: 2014 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:nzecpp:v:48:y:2014:i:2:p:183-195 Ordering information: This journal article can be ordered from DOI: 10.1080/00779954.2013.874394 Access Statistics for this article New Zealand Economic Papers is currently edited by Dennis Wesselbaum More articles in New Zealand Economic Papers from Taylor & Francis Journals |
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