Earnings are taxed in one combined general income and social security tax, which for wage and salary earners is deducted by the employer on a pay-as-you-earn basis (called PAYE), with annual adjustments. As of 2002/2003, effective personal income tax rates, that is, including low-income rebates, were 15% on taxable income up to $9,500; 21% for income between $9,501 and $38,000; 33% for income between $38,000 and $60,000, and 39% for income above $60,000. The system of rebates includes, in addition to standard deductions for the taxpayer and dependents, rebates for housekeeping or child-care expenses, and tuition. There are also rebates for certain dividend and interest income, life insurance premiums, and contributions to retirement funds. The income tax rate for corporations, including subsidiaries of overseas corporations, is 33%, applied to net income after certain deductions. There are tax incentives for exporters. On 1 October 1986, the government introduced a value-added tax (VAT), called the goods and services tax or GST, set at 10%, but later raised to 12.5%. Exported goods, goods held overseas, services in connection with temporary imports and exported goods are zero-rated for the GST. In 2003, the government is planning to zero-rate financial services. Excise taxes are imposed on motor vehicles, gasoline, tobacco products, and alcoholic beverages. There is a fringe benefits tax (FBT) payable quarterly by employers on the value of fringe benefits provided to employees and shareholders. Employers can choose to pay a flat rate of 64% or fully or partially attribute the value of the fringe benefits to the individual's income and pay at the appropriate rate. Capital gains are charged as the same rate as other income. The government ratified the Kyoto Protocol on climate change in December 2002, and plans to introduce an appropriate carbon tax.
Local authorities are largely dependent on property taxes. There are three main systems of rating: (1) capital (land improvements) value; (2) annual value; (3) unimproved value. The actual amount of the rate is fixed by each local authority.