PRESS RELEASE

Tax Freedom Day 2008 was May 21st

Wednesday May 21, 2008 was Tax Freedom Day (TFD) – the day New Zealanders stop working to pay the nation’s tax bill and start earning for themselves, according to leading accounting firm, Staples Rodway.

The Staples Rodway-commissioned research shows Kiwis paid off their taxes five days earlier this year. However, this is still 9 days longer than it took Australians - a gap which widened to more than three weeks during the years 2004 to 2007.

“It is pleasing to see the tax burden improving although we are still several days behind Tax Freedom Day six years ago when it was May 17th,” said Roger Thompson, Managing Director of Staples Rodway.

The improvement this year reflects the combination of slower growth in tax revenue and stronger nominal GDP growth. However, Mr Thompson did have some caution for those celebrating the earlier date, in particular the input of GDP in establishing Tax Freedom Day.

“The biggest contributor to the improvement in GDP growth was an increase in inflation – not an improvement in real activity. More than half of nominal GDP growth represents inflation rather than true growth in productivity,” said Mr Thompson.

“Tax revenues have been affected by the tightening of the economy with corporate profitability being squeezed by cost pressures, including both generalised costs due to high inflation and higher labour costs. However, individual tax revenue continues to be underpinned by healthy wage increases and very low levels of unemployment.

“The challenge is now for Dr Cullen to deliver meaningful tax cuts in Thursday’s budget so as to bring back Tax Freedom Day even further,” added Mr Thompson. International Tax Freedom Day Results

International Tax Freedom Day Results

• UK - Tax Freedom Day 2008 is estimated to be June 4 - two days earlier than in 2007.
• US - Tax Freedom Day 2008 is estimated to be April 24 - four days earlier than in 2007.
• Australia - Tax Freedom Day 2008 is estimated to be May 12 - the same as the previous year and just over a week earlier than in New Zealand.

International comparisons on Tax Freedom Day globally continue to place New Zealand slightly behind the USA and Australia but slightly ahead of the UK. More positively, New Zealand’s relativity against other countries has started to improve year-on-year.

Roger Thompson, Tax Director, Staples Rodway on 09 309 0463

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