And yet… the political economy of New Zealand is a peculiar thing. As some commentators have pointed out, NZ’s tax code
is extraordinarily flat by Anglo-American standards. Most UK Conservatives - and even US Republicans - would blush to propose a 33% top rate of income tax, no capital gains tax and no inheritance tax. But, as this data from the OECD
shows, NZ government expenditure is not wildly off the average of other rich nations - so what gives?
The answer, it seems, is a large (in relative terms) sovereign wealth fund
(SWF) and state-owned enterprises that throw off cash and contribute to a (pre-COVID) modest budget deficit. Ardern has been borrowing to fund the SuperFund since 2017
, which she says is smart when the markets are happy to lend to sovereigns on such generous terms. Of course, we don’t all have SWFs to plug budget deficits - but maybe we could. I stumbled across this interesting - and controversial - idea
to replace corporation tax with a SWF. With Ardern in the ascendant, perhaps it will catch on.