8 Oct 2013

Top earners paying more tax - English

7:18 am on 8 October 2013

The nation's top income earners are paying a greater share of income tax now than they were before the Government's tax reforms in 2010, Finance Minister Bill English says.

Total tax revenue in the 12 months to the end of June was 0.6% higher than forecast at $58.7 billion, which was 6.5% higher than in the previous year.

"A significant driver has been the increase in source deductions and other individuals' tax, both of which increased by about $1 billion compared to a year earlier," Mr English said.

"These increases have come about largely from a stronger labour market and from the tax reforms, including base broadening measures that we introduced in Budget 2010."

A feature was that higher income earners paid a larger share of income tax; only 6% of taxpayers earned more than $100,000 a year but they paid 37% of total income tax, he said. That was up from 29% in the 2010-11 tax year.

"So there's been some significant shift in higher income earners paying a greater share of income tax - the opposite of what the critics said would happen as a result of the tax reforms in 2010," Mr English said.

The higher tax take, combined with expenses coming in nearly 2% lower than expected, led to the Government's operating deficit for the year halving to $4.4 billion from $9.2 billion the previous year.

The Government's bottom line turned to a surplus of $6.9 billion, the first surplus since 2008, which mainly reflected investment gains by the New Zealand Superannuation Fund and the Accident Compensation Commission.