Clark David: Questions for Oral Answer — Questions to Ministers 
Clark David: Questions for Oral Answer — Questions to Ministers 
[Volume:678;Page:1242] 
11. 
Dr DAVID CLARK (Labour—Dunedin North) 
 to the  
Minister of Revenue 
: Given the evidence presented by IRD officials in their briefing for the incoming Minister that significant tax reforms enacted since 2008 have reduced the tax to GDP ratio and that “about 2.5 percentage points of this decline is attributable to policy changes” does he agree with the Minister of Finance that the Government’s tax changes have been “broadly fiscally neutral”; if so why? 
Hon BILL ENGLISH (Minister of Finance) 
 on behalf of the Minister of Revenue: Yes; because the Minister of Finance is usually right about these things. The Minister of Revenue is advised that the tax reforms that the Inland Revenue Department refers to in its briefing to the incoming Minister include the fiscally negative tax cut in the company tax rate under Labour in April 2008 the fiscally negative cut in personal taxes under Labour in October 2008 and all the tax changes that have happened under the National-led Government which as a package have been broadly fiscally neutral. So if the member is looking for someone to blame for a reduction in the tax to GDP ratio he should look to the Labour Party. 
Dr David Clark 
: To the nearest $1 billion how much of the $12 billion Government deficit this year is attributable to the decrease in revenue that resulted from the 2010 tax changes? 
Hon BILL ENGLISH 
: I cannot give him a number for exactly the 2010 tax changes. What I can tell the member is that if one adds up all the policy changes made by the incoming National Government including cancelling two significant tranches of tax cuts early in 2009 then in 2011-12 the National Government is actually collecting more tax than would have been the case if it had done no tax packages. 
Dr David Clark 
: Given that both he and the Minister of Finance continue to assert that the 2010 tax package was broadly fiscally neutral can he at least tell us to the nearest $2 billion how much of the $12 billion Government deficit this year is attributable to the decrease in revenue that resulted from the 2010 tax changes? 
Hon BILL ENGLISH 
: I think the member has answered his own question. The 2010 tax package was broadly fiscally neutral. We published numbers that showed that in the early years it did cost something and that then rose to a fiscal benefit from the tax package because we put GST up we put property taxes up and we cut income taxes. But I will repeat for the member’s benefit that the combination of all the decisions made by the National Government has been fiscally neutral. The previous Labour Government did two tax cuts that were fiscally negative and we are still paying for it. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I apologise to my colleague Dr David Clark. It was a relatively simple question asking whether the Minister of Revenue could give an estimate to the closest $2 billion. The core of the question was not addressed.  
Mr SPEAKER 
: I beg to differ because the Minister of Finance on behalf of the Minister of Revenue said that the particular tax cuts in question—2010 was it—were broadly fiscally neutral and pointed out where the revenue losses had occurred in previous tax cuts.  
Dr David Clark 
: How can he expect the public to accept the Government’s assertion that the tax switch was broadly fiscally neutral when the deficit has grown to $12 billion and he cannot even tell us to the nearest $2 billion how much of it was caused by his unaffordable tax switch? 
Hon BILL ENGLISH 
: Well I can expect the public to listen to the Government’s argument because they know that Labour’s story about this is nonsense—Labour’s story being that there have been big tax cuts which have created deficits. That is simply wrong. What actually happened was that Labour’s tax cuts in 2008 were fiscally negative. All our tax decisions have been roughly fiscally neutral. So if he is looking for tax cuts that affected the deficit he should look to the Labour Party not to this Government. [ 
Interruption 
]  
Mr SPEAKER 
: Order! I want to hear Dr David Clark’s question.  
Dr David Clark 
: Does he have plans to raise extra revenue to cover the nearly $100 million a year of net revenue loss from asset sales or will that hole be filled with more borrowing and more cuts to vital Government services? 
Hon BILL ENGLISH 
: This Government is not making cuts to vital Government services; what we are doing is getting them reorganised to provide efficient public services at less cost. And actually we are making progress because the previous Government pumped endless money in for no better results. We are going to get better results although we do not have endless money to pump into public services.