Sunday, August 09, 2015

Only decile 5 households and above pay tax

Here's another useful graph (based on 2013 data)  from Treasury. While not news it's useful to see the numbers. The gross tax does not include excise on tobacco, alcohol and fuel but referring back to yesterday's table, that equates to an average of $788 in the lowest 4 deciles. Add it in and the statement remains true. The lowest 4 deciles (around 650,000 households) effectively pay no tax:

Interpretation Notes

Deciles are based on household equivalised disposable income minus  GST.

Income is equivalised using the Jensen 88 equivalisation scale

Disposable income is total income after (gross) tax and tax credits.

Gross income includes income from all sources including benefits and transfers but before taxes are removed.

Gross Tax includes personal income tax and GST (unless stated otherwise). It does not include excise or other taxes.

Net Tax is Gross Tax minus benefits (including NZ Super and Accommodation Supplement) and tax credits such as Working for Families

Decile 1 includes households with negative reported self-employment income and households living on savings 

GST is calculated based on household expenditure on goods and services that incur GST as reported in HES


Anonymous said...

No representation without taxation seems like a better and better idea!

Jigsaw said...

I would imagine that this means that people on the government pension are paying tax. Is that correct?

Lindsay Mitchell said...

Wouldn't it depend on whether they have other sources of income? If they were dependent solely on Super (what I understand you mean by "government pension") then they will be in the lowest deciles and have negative net tax.

Anonymous said...


Are you sure they are in the bottom deciles? My understanding is that the reason why the "poverty rate" for the elderly is so low is that National superannuation on its own is just enough to get you above the magic threshold of 60% of the median income.

If that is the case you would expect the elderly to be congregated in the 6th percentile.

Lindsay Mitchell said...

I'll blog a chart for you which addresses this.