The latest background papers
Family tax credits: Do children get the support in New Zealand that they would get in Australia? (June, 2020)
This paper, titled, Family tax credits: Do children get the support in New Zealand that they would get in Australia? by CPAG researchers Caitlin Neuwelt-Kearns and Associate Professor Susan St John, examines how Australia and New Zealand use targeted or abating child tax credits as the dominant mechanism to recognise that households with children have additional costs and this backgrounder compares their generosity and operation.
No two international contexts are directly comparable, and indeed Australia has a significantly different tax system to that in New Zealand. The PAYE rate structure is much more progressive with a zero first band of $20,000 of income and a 10% GST that exempts many necessities. Even with these advantages for low income people, Australia’s tax credits specifically for the support of children are significantly more generous. New Zealand’s family tax credit system at present is overly complex and unfairly penalises children in the poorest households.
While other income support mechanisms such as paid parental leave are important in shaping family and child wellbeing, this backgrounder focuses specifically on the tax credits for children paid to the principal caregiver.
This paper, titled: “The effects of 2020-21 income support changes on After Housing Costs (AHC) incomes for representative households receiving benefits” examines if the Government's COVID-19 package is sufficient to lift families out of poverty who are currently receiving benefits.
Using a key government measure of child poverty, the 50 per cent after housing costs median income,* Child Poverty Action Group has examined whether the latest policies released as part of the Government's COVID-19 package, will keep families on core benefits at or above this line in 2020/2021.
This quick guide explains the In-Work Tax Credit. What it is, who gets it, how it fails in its objectives, and what we can do to fix it.
We all want to see New Zealand children develop and thrive, free from the lifelong effects of poverty. There is no quick fix - but there is one thing this government could do today to help lift thousands of New Zealand children from the deepest poverty. With a simple tweak to an outdated, discriminatory policy, they could make the In-Work Tax Credit available to the kids who need it most of all.
A briefing paper prepared for CPAG by Susan St John (February 2020)
CPAG argues reform of the In-Work Tax Credit (in the context of needed reform to the whole of Working For Families) is well overdue. The poor design of these policies has entrenched poverty for the worst-off children. This briefing shows how the In-Work Tax Credit fails both objectives of reducing child poverty and incentivising paid work. The logical and cost-effective first step to alleviate the worst child poverty is to join the In-Work Tax Credit to the first child Family Tax Credit. This will markedly boost those families with the lowest incomes.
Read the full briefing paper here.