Advanced Search
MyIDEAS: Login to save this paper or follow this series

Effective Tax Rates on Capital in New Zealand - Changes 1972-1998

Contents:

Author Info

  • Alowin Moes
Registered author(s):

    Abstract

    Effective tax rates (rather than statutory tax rates) on capital assets can give us an idea of the level of distortion imposed on investment by the tax system. This paper describes a study of effective tax rates on different types of capital assets in New Zealand using the King-Fullerton methodology. While the usual caveats of the application of King-Fullerton methodology apply, a clear story emerges from the data. The model demonstrates the severely negative impact of inflation, especially under the old tax regime and at the high rates of inflation seen in the late 1970s and 80s. By comparison, the current tax system is shown to be rather consistent across different types of capital assets and means of financing. The low inflation of the past few years has contributed to the improvement, but this study shows that the new tax regime performs better even under equalised circumstances (e.g. zero inflation) for the whole period under consideration.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.treasury.govt.nz/publications/research-policy/wp/1999/99-12/twp99-12.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 99/12.

    as in new window
    Length: 44 pages
    Date of creation: 1999
    Date of revision:
    Handle: RePEc:nzt:nztwps:99/12

    Note: This paper has benefited immensely from preparatory work by Peter Goss. The paper was originally prepared for the New Zealand Association of Economists Conference, Rotorua, 30 June to 2 July 1999.
    Contact details of provider:
    Postal: New Zealand Treasury, PO Box 3724, Wellington, New Zealand
    Phone: +64-4-472 2733
    Fax: +64-4-473 0982
    Web page: http://www.treasury.govt.nz
    More information through EDIRC

    Related research

    Keywords:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. McKenzie, K.J., 1992. "The Implications of Risk and Irreversibility for the Measurement of Marginal Effective Tax Rates of Capital," Papers, Calgary - Department of Economics 137, Calgary - Department of Economics.
    2. Iwamoto, Yasushi, 1992. "Effective tax rates and Tobin's q," Journal of Public Economics, Elsevier, Elsevier, vol. 48(2), pages 225-237, July.
    3. King, Mervyn A, 1974. "Taxation and the Cost of Capital," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 41(1), pages 21-35, January.
    4. Robin Boadway & Neil Bruce, 1988. "Problems with Integrating Corporate and Personal Income Taxes in an Open Economy," Working Papers, Queen's University, Department of Economics 735, Queen's University, Department of Economics.
    5. Hansson, Ingemar & Stuart, Charles, 1986. "The Fisher Hypothesis and International Capital Markets," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(6), pages 1330-37, December.
    6. David F. Bradford & Charles Stuart, 1986. "Issues in the Measurement and Interpretation of Effective Tax Rates," NBER Working Papers 1975, National Bureau of Economic Research, Inc.
    7. Kenneth McKenzie & Jack Mintz & Kimberly Scharf, 1997. "Measuring Effective Tax Rates in the Presence of Multiple Inputs: A Production Based Approach," International Tax and Public Finance, Springer, Springer, vol. 4(3), pages 337-359, July.
    8. Auerbach, A.J. & Hines, Jr.J.R., 1988. "Investment Tax Incentives And Frequent Tax Reforms," Papers, Princeton, Woodrow Wilson School - Public and International Affairs 135, Princeton, Woodrow Wilson School - Public and International Affairs.
    9. Don Fullerton, 1983. "Which Effective Tax Rate?," NBER Working Papers 1123, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:nzt:nztwps:99/12. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Web and Publishing Team, The Treasury).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.