MINISTER’S EXECUTIVE SUMMARY | 9
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
0.9%
-2.5%
2.6%
0.1%
-0.2%
-0.1%
0.7%
2.8%
-2.5%
0.6%
0.1%
-0.4%
-0.3%
0.4%
4.2%
-2.6%
0.1%
0.3%
-0.9%
-0.4%
0.7%
H
ous
e
ho
l
ds
ear
n
i
n
g
<
$40k
H
ous
e
ho
l
ds
ear
n
i
n
g
$
40k
-
$85k
H
o
us
e
hol
ds
e
ar
n
i
n
g
>
$8
5k
Personal
income tax
GST
NZS & benefit
compensation
Changes to
depreciation
rules*
Net impact
Company
tax & top
PIE rate*
Integrity
measures
(WfF , GST,
LAQC, Audit)*
* 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.
