How New Zealand's income tax ranks against the world

National has proposed linking income tax to inflation to help meet the high cost of living - but is New Zealand's income tax really that high? 

New Zealand's personal income tax rate sits around the global average for 2018 which was 29 percent, data from KPMG, one of the four biggest global auditors, says. 

In a list of personal income tax rates of 135 countries, New Zealand's tax rate was the 61st highest - significantly lower than the likes of many European nations and much lower than our closest neighbour, Australia. 

In Sweden, the average personal income tax rate from 2006 to 2018 was 57 percent, compared to New Zealand's average of 35 percent during that same period. 

The highest average personal income tax rate was in Aruba, a tiny Dutch Caribbean island off the coast of Venezuela, where the average rate was 59 percent during that period, and reached a whopping 60 percent in 2006. 

The top five countries with the highest average personal tax rates also included Denmark (56 percent), Japan (56 percent) and Austria (55 percent). Australia was in the top 20 at 45 percent, behind Luxembourg and Iceland (both 46 percent). 

The countries with the lowest average personal income tax rates were mostly in the Middle East, where personal income tax rates are often non-existent. That applies to Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). 

However, the UAE and Saudi Arabia this year introduced value-added tax, following an oil slump, ending a long enjoyed tax-free and heavily subsidised existence for residents. A 5 percent levy was imposed on most goods and services, but not on personal income. 

Aside from those countries where personal income tax is non-existent, the lowest average rate was in Guatemala at 7 percent, behind Montenegro (9 percent), Serbia, Romania, and Monglolia (all 10 percent). 

National leader Simon Bridges has proposed linking New Zealand's personal income tax rate to inflation to help people meet the rising costs of living. 

Under the proposed model, you wouldn't move into higher tax brackets when your income isn't keeping up with the rising cost of living, as it would be adjusted every three years upon advice from the Treasury. 

The Government pledged in December to raise the minimum wage by $1.20 from April this year - the biggest boost since the 1980s. It would be increased to $17.70 an hour from the current $16.50, in a bid to help low-income households. 

But the move has been criticised by the likes of ACT MP David Seymour who says it could strip workers of opportunities as businesses will have to fork out more on wages.