What Is Tax?
Tax is money collected by the government to help pay for things the country needs.
Shared services
Governments collect money in different ways, and tax is one of the main ways.
Tax on income
When adults earn money from working, some of that income may be paid as tax. We're keeping this simple — no tax brackets or exact rates here.
Tax on spending
Tax can also be included in the price of things people buy. In New Zealand, this is called GST — a tax added to most goods and services. It's already included in the price you see on the shelf, rather than added on separately at the till.
Tax helps pay for shared services and infrastructure that people use every day — it isn't simply money disappearing.
Where does it go?
You buy something for $20. Part of the price may be tax. Where do you think that tax ultimately goes?
It goes toward things like roads, schools, hospitals, and other services the whole community uses — even things you might not personally use every day.
This is just an introduction to taxation — your child doesn't need to understand the New Zealand tax system in detail. Focus on everyday examples and the idea of contributing towards shared services.
Where to next
More on income, expenses and where money comes from.