Australia has a new fear – a brain drain to New Zealand.
Australian Treasurer Joe Hockey has sounded the alarm, warning that an increasing number of Australian residents are moving to New Zealand, including “high net worth” individuals, The Australian reported on Monday.
Hockey has outlined a proposal to cut taxes to make Australia more competitive.
He told ABC Radio New Zealand’s lower income tax rate was “unquestionably” part of the reason increasing numbers of Australian residents were moving to New Zealand.
“New Zealand has a top personal tax rate of 33 cents in the dollar. We have a top personal tax rate of 45 cents in the dollar, plus two per cent for the Medicare levy, plus two per cent for the temporary budget repair levy – so 49 cents in the dollar.
“Sooner or later people start to move to New Zealand and that’s what’s happening. In fact, in the last 12 months, for the first time in years, there were more people moving to New Zealand than there were New Zealanders moving to Australia.”
Labour and capital is now globally mobile. If you tax either too much, they will move to where they get taxes less. It is not the only factor in the movement of labour and capital – but it definitely plays a role.