James Kelso
June 5, 2024

Did you celebrate 26 May with woops of joy and champagne?  Maybe you ought to have done as this was Tax Freedom Day. What’s that you might ask?  It a hypothetical day in our tax calendar that supposedly marks the time when Kiwis pay off their collective tax bill.  Thereafter, apparently, every dollar we earn becomes ours from that day forward.  Yeah Right!

Historically, well at least for the past two years, Tax Freedom Day fell on 20 May.  Prior to this, 18 May was the auspicious day.  This year it’s come later, being rejoiced on 26 May.  Annual calendar dates tend to stay static so why does this one alter?  That nasty monster Inflation without inflation adjusted tax brackets is the culprit.  Yep, inflation creates fiscal drag which pushes into higher tax brackets and ramping up our tax bills.  Couple this with increased government spending and it takes longer to meet the theoretical keystone of collectively paying off our tax bill.  This year, Nicola Willis put things right in the Budget, resetting the tax brackets for the first time since 2010.  That said, what you save in tax bracket adjustments is unlikely to buy you a bottle of decent blonk, let alone top shelf bubbles!

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