N.Z. 13th in tax ranking

Press, 12 January 1981, Page 4

N.Z. 13th in tax ranking

New Zealand ranked thirteenth among 18 leading industrialised countries in a 1979 table of total tax revenue as a proportion of gross domestic product at domestic prices, according to the latest issue of “Economic Trends.” Tax revenue in New Zealand that year amounted to 31.4 per cent of the gross domestic product, 1 per cent higher than the previous year. New Zealand ranked lower than Britain, which was tenth in the rankings, lower than most other members of the European .Economic Community, apart from Italy and the Irish Republic. The tax table shows that British tax revenue in. 1979 amounted to 33.8 per cent of gross domestic product- at market prices. . / ■ That put Britain squSrely between high and low' tax countries, according to a Press Association report from London. Britain’s ranking showed

I that it was not a heavily taxed country by international standards. Between 1971 and 1978, Britain was exceptional in reducing the proportion of taxes raised to gross domestic product by two percentage points. Of the 12 most important industrialised countries, only Canada managed to do the same. In all ■■other countries listed, the proportion rose over those years, often steeply-/' Sweden, Norway, and Denmark come predictably high on the list in first, third, and fourth places respectively. Portugal, Spain, and, although not included in the table, Japan rank as lowtaxed countries. Problems in comparing countries arise hecauffc of different tax systems? .4/ .. For example, some’; countries rely on tax allowances which reduce tax revenues. Others take tax only to return it in the form of cash benefits, which serves, to in-

flate tax revenues. One interesting aspect of the figures is that they suggest only a tenuous link between a country’s economic prosperity and its tax burden. All the countries ranking above the United Kingdom on the table are richer, in terms of gross domestic product per head, but so are some of the countries with lower burdens, such as Switzerland, the United States, and Canada.