Govt tax take in 2023 projected to be double that of 2011

Have your wages doubled since 2011? Not likely. In general wages increases have been pretty moderate over the last ten years. In 2011 the NZ govt was collecting around $50 billion in taxes from you. In 2023, treasury project the tax take will be double that at $100 billion. It will rise to over $110 billion in 2025.

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Govt likes to camouflage exactly how much they’re taking from you by constantly expressing the tax take as a percentage of GDP. Its a misleading measure and many economists are calling for this to be changed to a measure that more accurately represents proportionate govt takings.

The problem is GDP is such a wide ranging measure. It measures every dollar changing hands in the economy, even when the money is untaxed or unproductive.

For example it costs roughly $50 billion to run the govt. This figure includes wages, expenses, rent, insurance and all other costs of running such a huge institution as the NZ govt is today.

All transfer payments associated with welfare or grants or funding etc come out of the budget after this $50 billion. All of the money changing hands under this largely unproductive operation adds to the GDP and effects the tax to GDP ratio. Its called “churning” in economic circles, and its why tax as a percentage of GDP stays relatively low.

Taxes are projected by the Ardern govt to grow by $20 billion over the next four years. However there is no indication of where this money will come from, other than the expectation of economic growth.

What economic growth and where is unspecified. Frankly, there’s no evidence it will even exist.

Who is backing the Ardern govt, with its track record of failure and mismanagement to succeed in this endeavour? Its a pretty long odds bet.