Friday, November 28, 2008

The Flat Tax Begins to Percolate in New Zealand

January 14, 2008

By Alvin Rabushka

New Zealand is scheduled to hold general elections for the 49th session of its parliament in late 2008, but no later than November 15, 2008, to comply with the convention that sessions shall not exceed three years. Current polls suggest that the opposition National Party will supplant the Labour Party as the leading vote-getter, but whichever wins a plurality of votes may have to form a coalition with the Green Party. Other minor parties include the Maori and the First-ACT parties.

Polls show that voters in the National, Green, Maori, and First-ACT parties favor a flat tax of 20% on both personal and corporate income, with the lost revenue to be recovered by increasing the Goods and Services Tax (a VAT) from 12.5% to 20%. A survey conducted by Shape NZ revealed that the combination of a 20% flat-rate personal and corporate income taxes coupled with a rise in GST tax was preferred by voters in the four parties to the alternatives of cutting the top personal rate from the current 39% to 30%, or setting the top personal and corporate rates (currently 33%) at 28%.

The New Zealand Business Council for Sustainable Development, which supports the 20% flat tax, maintains that it would encourage innovation and promote economic growth.

Shape NZ research can be accessed at

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