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Population ageing and taxation in New Zealand

Author

Listed:
  • John Creedy
  • Jamas Enright
  • Norman Gemmell
  • Angela Mellish

Abstract

This paper considers the implications for personal income tax and Goods and Services Tax (GST) revenues of population ageing in New Zealand. It considers 'pure' ageing effects; that is, population size is held constant but its age distribution changes over the next 40 years. With age-earnings profiles having a peak in the 45-54 age range, and the expected average age of the population over the next 40 years transiting this age range, younger individuals with increasing incomes are expected to approximately counteract the declining incomes of older individuals. However, ageing is expected to increase the dependence of income tax and GST revenues on pension choices. Without changes in New Zealand Superannuation (NZS), its cost is expected approximately to double over the next 40 years, with most of this occurring over the next 20 years.

Suggested Citation

  • John Creedy & Jamas Enright & Norman Gemmell & Angela Mellish, 2010. "Population ageing and taxation in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 44(2), pages 137-158.
    • Handle: RePEc:taf:nzecpp:v:44:y:2010:i:2:p:137-158
    DOI: 10.1080/00779954.2010.492574
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    References listed on IDEAS

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    Cited by:

    1. Robert A Buckle & Amy A Cruickshank, 2013. "The Requirements for Long-Run Fiscal Sustainability," Treasury Working Paper Series 13/20, New Zealand Treasury.
    2. Prammer, Doris, 2019. "How does population ageing impact on personal income taxes and social security contributions?," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).
    3. Cylus, Jonathan & Williams, Gemma & Carrino, Ludovico & Roubal, Tomas & Barber, Sarah, 2022. "Population ageing and health financing: A method for forecasting two sides of the same coin," Health Policy, Elsevier, vol. 126(12), pages 1226-1232.
    4. Omar A Aziz & Christopher Ball & John Creedy & Jesse Eedrah, 2013. "The Distributional Impact of Population Ageing," Treasury Working Paper Series 13/13, New Zealand Treasury.

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