Is this also true for New-Zealand?

Question

"Revenues from a value added tax are frequently lower than expected because they are difficult and costly to administer and collect."

Since New Zealand has few exemptions on its GST...i wonder weither the predicted revenues are more accurate...

Answer 1

Yes, in New Zealand where collection of personal income taxes and corporate profit taxes has been historically weak, VAT collection has been more successful than other types of taxes. VAT has become more important in many jurisdictions as tariff levels have fallen worldwide due to trade liberalisation, as VAT has essentially replaced lost tariff revenues. Whether the costs and distortions of value added taxes are lower than the economic inefficiencies and enforcement issues (e.g. smuggling) from high import tariffs is debated, but theory suggests value added taxes are far more efficient.

The GST of 12.5% that applies to Free on Board (FOB; cost of the product, plus all transportation costs from the manufacturer to the port of departure, plus costs of loading the vessel) value.