Impact of tax changes on households
While higher income earners receive larger income tax reductions, they also bear the impact of most of the tax base broadening. The following shows one way of estimating the impact of the reforms on households at different income levels. The net gains from the tax changes are distributed approximately proportionally across household income groups.
- Figure 4 - Estimated impact of tax changes as % of the average disposable household income
- Source:
[*] Indicates that because part of the impact of these measures is on companies, this impact has been partially allocated offshore and partially through dividend distribution data to households
Where possible, the static fiscal impacts for the 2011/12 year have been allocated to three household income bands, each of approximately 550,000 households. The allocation uses available data on household income, and asset holdings. Where the primary impact of a tax measure is on companies or trusts, the allocation to households reflects current dividend payment patterns. Some of the impact of the tax package (eg, changes to thin capitalisation rules and some proportion of the changes to the company tax rate and depreciation rules) has been allocated to non-residents and so is not shown here. The allocation to non-residents affects the total amount allocated among residents but does not change the relative distribution between households at different income levels.
The allocations are based on Household Economic Survey and Survey of Family, Income and Employment data sourced from Statistics New Zealand.
