Here's my summary of the key events overnight that affect New Zealand, with news taxes on wages in New Zealand are among the lowest in the OECD.
But first, as we head towards the long holiday weekend, the S&P 500 is on track for its worst day in three weeks amid mounting geopolitical tensions.
In the US, job openings rose to a seven-month high in February while the pace of hiring slipped, pointing to a growing skills mismatch and a further tightening of their labour markets.
In Germany, economic sentiment improved sharply and much more than expected in April, pointing to a pickup in economic growth in the months ahead for them.
In Australia, consulting firm Deloittes is warning that there is little an Aussie government could do if China falls off the rails. That could happen, they say, if there is a trade war, a banking crisis or a loss of public confidence as asset (house) prices fell. The Deloitte modelling is based on a scenario in which China’s growth rate slows from the 6.5% targeted this year to less than 3%. A downturn in China would bring a recession in Australia costing 500,000 jobs and sending house and share prices slumping. The reason the Aussie government couldn't lean against such an impact is their budget already deep in deficit and the RBA’s interest rates are at a record low. So there would be little authorities could do to soften the impact of a slump in China.
New Zealand not only doesn't now have a budget deficit, it has also scored second best in the OECD's review of Taxing Wages. And for families with children, taxes on their earnings in New Zealand are the lowest of all the OECD counties surveyed.
In New York, the UST 10yr yield is noticeably lower at 2.30%.
Oil prices are up slightly today and now just over US$53 for the US benchmark, while the Brent benchmark is now just over US$56 a barrel.
But the gold price is sharply higher on those geopolitical tensions, up US$20 at US$1,273/oz.
However the New Zealand dollar starts today little changed at 69.6 USc. On the cross rates the Kiwi dollar is up to 92.8 AU¢ and against the euro is at 65.6 euro cents. The NZ TWI-5 index is now at 74.9.
If you want to catch up with all the changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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11 Comments
Be careful, a quick jump to the report and a superficial scan very quickly reveals that the "tax" they refer to is ONLY PAYE. There is not one accounting for the impacts of GST and other levies applied by Government, nationally and locally. This is likely the type of information that will be misused by politicians and economists. Michael Cullen for example used similar information when refusing tax cuts, when shortly after it was identified (by a University Professor if I remember correctly) that the average tax rate in NZ taking it all into account was actually 47 odd%. So easy to misread, misunderstand and misapply.
Very good point. Actually, I was thinking about this last night, as I was looking at Trading Economics' list of indicative tax rates from around the world (http://www.tradingeconomics.com/country-list/personal-income-tax-rate).
But how relevant is the tax rate at source on wages when you still have so many non-competitive suppliers to 'living supplies' that you need to spend the money left in your pocket? Supermarkets, Fuel, Insurance continues to shrink in competitors, Rates and Council Fees - there is no competition here, etc.
I realise that but pay is one thing. The sales taxes in the US vary greatly but are nothing like our GST. The US also has a lot of taxes that we don't get including capital gains and the tax on your estate when it's worth over a certain percentage.
If you really want to include everything you'd need to factor in the tax write offs for mortgages in the US (effectively a subsidy). Here you can only get a write off like that if you have a home office or use parts of your house for business purposes.
It's tough to get an apples with apples comparison unless you focus on specific items.
Be careful, a quick Google search reveals NZ has the 6th lowest VAT/GST rate in the OECD. Average rate is 19.2%
https://www.oecd.org/tax/consumption/consumption-tax-trends-france.pdf
Yes all that shift to indirect taxes occurred with Rogernomics. Individual top tax rates went down from 66% to 33%, but anything that government did, had the concept of user pays. It is very deceptive. Also around that time the government heavily reduced it debt, not by paying it off though, but by shifting it into SOEs. Its a wonder some of them survived, they were so heavily geared
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