What is our tax spent on?

The government spends the tax revenue that it collects on public services and infrastructure.
In 2025, core government expenditure totalled approximately $142 billion. Social security, superannuation, health and education make up the largest areas of government spending.

How does our tax system compare internationally?

Looking at how New Zealand compares with other developed countries helps us understand the strengths and weaknesses of our tax system. In particular, the Organisation for Economic Co-operation and Development (OECD) collects and publishes internationally comparable data on the revenue and expenditure of its member countries, which include 38 high income countries with advanced economies.

How much tax do we collect compared to other countries?

As a share of the economy (GDP), New Zealand collects less tax than the OECD average and significantly less than many of the countries we like to compare ourselves with.
Tax as a % of GDP 2024

What is different about how we structure our tax system?

Compared with most OECD countries, New Zealand relies more heavily on personal income tax and GST.

On average across the OECD, personal income taxes accounted for 24% of total tax revenue in 2023. In New Zealand, the OECD estimates personal income taxes accounted for almost 42% of total tax revenue.1 This reflects New Zealand's greater reliance on income tax to fund government spending. Most OECD countries instead raise a significant share of revenue through separate social security contributions. A larger share of New Zealand's personal income tax revenue comes from salaries and wages than most OECD countries.

On average across the OECD, taxes on goods and services accounted for 21% of total tax revenue. In most countries this is represented by a “Value Added Tax” (VAT) which is analogous to GST and accounts for 25% of tax revenue in New Zealand.

One important reason why other countries rely less on personal income tax and GST is that they make greater use of taxes on wealth or capital gains. For example, out of the 38 OECD member countries, 31 (81.5%) have explicit, comprehensive CGT regimes. This includes countries NZ typically compares itself to such as Australia, Canada, the UK and Ireland. Among the remaining countries that do not have a comprehensive CGT, New Zealand has one of the most limited regimes for taxing capital gains, primarily through the two-year “bright-line” test for residential property.

Further information on OECD country capital gains tax approaches is available in Tax Justice Aotearoa’s report on Capital Gains Taxation in OECD and Comparable Nations.

Footnotes
1. The OECD classifies tax revenues differently from Inland Revenue. The OECD measure of personal income tax excludes and includes some revenue categories differently from Inland Revenue's "Individuals tax" category, so the figures are not directly comparable.