Aotearoa in the top 10 of the global inequality index, but the impact of the tax system on inequality is 136th

Oxfam Aotearoa’s Director of Communications and Advocacy, Dr Jo Spratt, said of the Commitment to Reducing Inequalities Index:

“The inequality index shows that Aotearoa is doing quite well overall, but there is still work to be done. The fact that both rich and poor countries have exacerbated an explosion of economic inequality since the outbreak of the pandemic from 2020 is unacceptable.

“Billionaire wealth and corporate profits have reached record levels during the Covid-19 pandemic, while more than a quarter of a billion more people could fall into extreme levels of poverty this year due to the coronavirus, rising global inequality and the shock of food prices raises supercharged by the war in Ukraine.

“Taxation is one of the most powerful tools we have to fight inequality. It is disappointing to see the New Zealand tax system contributing to the gap between rich and poor. Especially in these extraordinary times, taxation is crucial to increase government resources to support social protection systems and public services.

“A tax on supermarket excess profits could be used to support the poorest households most affected by rising food prices. Excess profits and windfall tax revenues can help address the biggest challenges of our time, like exploding inequality and the climate crisis.

The 2022 Inequality Reduction Commitment Index (IRC index) is the first detailed analysis of the kind of policies and actions to address inequality that 161 countries might have taken in the first two years of the pandemic.

New Zealand ranks eighth overall and seventh in the world in tax progressivity. The index found that the New Zealand tax system is efficient in collecting revenue; however, this comes at a cost as New Zealand’s tax system directly contributes to an unequal distribution of income. On this point, New Zealand ranks 136th in the world. Oxfam says the government has made progress since 2020 in raising the top tax rate slightly, but needs to do more in taxing wealth and exploring better ways to tax business profits.

The table below shows New Zealand’s ranking on the key indicators that make up the CRI.

INDICATOR

RANK

PUBLIC SERVICES

Education expenditure

98

Social protection expenditure

35

Health expenditure

9

Average Public Service Expenditure Indicators

14

Implementation of the public service

18

Impact of public services on inequalities (Gini)

33

Progressivity of public services

22

TAX

tax policy

91

Tax productivity

3

Fiscal impact on inequality (Gini)

136

Tax progressivity

seven

WORK

Labor rights

74

Rights of women at work

29

Minimum wage

35

Indicator average labor policy

50

Coverage of labor rights

36

Impact of wages on inequality (Gini)

53

Progression of labor legislation

35

GENERAL CLASSIFICATION

Commitment to reduce inequalities

8

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