So where are taxes coming from right now? The three main areas are PAYE (pay as you earn personal income tax), GST (goods and services tax) and Company tax.
The Consumer tax (green) above includes PAYE and GST. These two are lumped together as one total on the basis that the bulk of GST is paid by PAYE earners when they spend their after tax income. (For the record in 2010 for every dollar of PAYE collected 75 cents of GST was collected.)
Corporate tax (blue) is company tax paid by businesses on their profit not their total income.
Consumer and Corporate tax makes up close to 90% of all tax collected. The total tax take today is equivalent to the value of about 30% of all production (GDP). Business currently pays 4.2% of this and consumers an outrageous 24% of total production.
All of this supports Gareth Morgan’s assertion that “The highest contribution to the tax collect is not made by those with the greatest means, it is made by those with the highest taxable income” and ability to spend that income and pay GST.
Hopefully a well designed Capital Gains Tax (CGT), that taxes most if not all income, will take the unfair pressure off wage and salary earners. Clearly these people are the back-bone-of–the-country.