 Who would win from a multi-rate GST in New Zealand: evidence from a QUAIDS model*Alastair Thomas New Zealand Economic Papers, 2022, vol. 56, issue 2, 141-168 Abstract: The merits of New Zealand moving away from its broad-based single-rate GST structure – particularly by removing GST on food – are often raised in public discourse and political campaigns. This paper investigates who would benefit from the introduction of a multi-rate GST structure in New Zealand and, in particular, whether reduced GST rates would be a more effective way of providing support to poorer households than New Zealand’s current income-tested tax credit approach. Behavioural simulation results from a QUAIDS model confirm previous findings that applying reduced GST rates to food and beverages would have a small progressive effect, but that richer households would benefit more than poorer households in aggregate terms. Meanwhile, reduced GST rates applied to recreational and cultural expenditure would have a regressive effect. Additional simulation results clearly show that the family tax credit is a far superior mechanism for providing support to poorer households than reduced GST rates. New Zealand should therefore maintain its current approach of a broad-based single-rate GST and income-tested tax credits. Date: 2022 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:nzecpp:v:56:y:2022:i:2:p:141-168 Ordering information: This journal article can be ordered from DOI: 10.1080/00779954.2021.2020324 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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