A very good press release from Rodney Hide on the cost of fiscal drag. This is the extra tax that people end up paying as inflation pushes their income up, but tax brackets do not adjust. Rodney points out that the tax cuts we learn about next week may be less than the fiscal drag since 1999, so one may end up not even being compensated for inflation. Some details:
- The cost to taxpayers of fiscal drag since 1999 has been around $10 billion
- Kiwis on the average wage need $35 a week just to break even
- A Kiwi on the average wage has paid $4,232 extra tax over eight years. The cost for 2007-08 was $1,198.07 or $23 a week and if nothing changes in the Budgetit’s likely to go up to $27 a week
- Since 2000, the average gross wage has increased 36% but the total tax paid on that wage has increased 56%.
Very timely to point this out.