Bayly Andrew; Rurawhe AdrianINCOME TAX (ADJUSTMENT OF TAXABLE INCOME RANGES) AMENDMENT BILLFirst ReadingANDREW BAYLY (National—Port Waikato) on behalf of Hon Simon Bridges: I move That the Income Tax (Adjustment of Taxable Income Ranges) Amendment Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill.I have the pleasure of introducing this bill on behalf of the Hon Simon Bridges who as the leader of National proposed this as a substantial issue of dealing with the costs of living and making sure that New Zealand families were not disadvantaged through the rise of inflation and what it meant in terms of pushing people up into a higher tax bracket. It is a great piece of legislation. I'm very grateful that the Hon Simon Bridges first of all worked on the idea and then was lucky enough to have the opportunity to have this bill drawn from the ballot box so that we can debate this issue.I think in today's context where we are seeing skyrocketing costs of living particularly the effects of that on people who are on benefits low-income families and superannuitants the issue of tax creep is a very very significant issue. We estimate that the average New Zealand householder is now about $9000 worse off over the last three years as a result of increases in rent. We've seen rent increases over $100 per week and of course people who are renting are in the main either young people waiting or hoping to buy a house which is increasingly out of their reach or people who simply do not have either sufficient income or sufficient deposit to buy a house. And of course with the way things are working and moving in the housing market that is an unlikely possibility that is increasingly becoming a reality for many.Now we've seen increases in power costs we've seen increases in food costs we've seen increases in fuel costs—all that is making our lower-income people particularly worse off and people are struggling. New Zealanders are struggling now under the burden of increasing costs and most of that is driven by inflation. It's certainly the measure of how we deal with the issue of costs of living but inflation is driving a lot of those increases and making New Zealanders effectively worse off—less pay to have discretionary income or even to meet the main parts of their household budget. And of course we had a Budget that was focused primarily on beneficiaries. A lot of money was directed toward beneficiaries but nothing was really directed toward superannuitants and low-income families.So this bill is about how we deal with the issue of inflation when it comes to tax and this issue is referred to technically as fiscal drag" but in effect what it means is that through the effects of inflation as people's incomes increase with inflation they increasingly have to pay more rates of tax. So the current thresholds as many will know up to $14000 you pay 10.5 percent; between $14000 and $48000 you pay 17.5 percent; $48000 to $70000 you pay 30 percent; and $70000 to $180000 we've got this new tax rate that this Government brought in only very recently where you pay 39 percent—33 percent but once you get over $180000 you get to 39 percent. So we've now effectively got five tax rates. And as a result of inflation what happens if you're on—let's say you're on $47000; you then start to flip over as a result of inflation. You might start to flip over increasing your tax rate from 17.5 percent to 30 percent once you get over the $48000.So if it was a case of real increase in wages above the rate of inflation that would be fine but what this bill does is recognise that inflation is a major driver of how people get into a higher tax bracket. And so what the bill requires is for the Government every three years to look at what has happened with inflation and the inflation rate it uses is the Consumers Price Index. There's a whole range of different inflation rates and measures—Producer Price Index. But for the purposes of this bill it uses the Consumers Price Index and it says that every three years there is a reset to make sure that people effectively if there's been a substantial amount of inflation will be no worse off as a result of that inflation. That means that they will still be paying the equivalent amount of tax or the tax rate that would have applied if there hadn't been inflation. So it is a very important one about making sure that New Zealand families and individuals are not worse off as a result of inflation.So the costs of this are very significant. It is estimated it is roughly about $700 million in cost. It's a very significant tax change that the Hon Simon Bridges is proposing and of course it helps particularly those on lower incomes because of where the banding works but it is a way of making sure that we can support those people and it is a way of allowing people to have more money in their pocket as they try and deal with the increasing costs that are currently happening. Of course we've seen the rampant rise in inflation. We saw the recent rate of 3.3 percent that was just recently announced. That is biting into the pockets of New Zealanders. So unfortunately inflation is the friend of Government but the scourge of the working family and from a Government revenue perspective this is far reaching in terms of the projections for income that the Government will generate from personal tax rates.The Government collects about $85 billion in tax. That includes all the different types of taxes but a large chunk of that is from personal tax and so this is a significant significant portion about 48 percent personal tax. So this is a significant portion of the tax take and so it's very meaningful in terms of New Zealanders looking at their situation and going "Am I going to be better off as a result of this?" And one thing you can be guaranteed to say is that this bill will actually make New Zealanders much better off. There are some very specific clauses in it but the new section YA 2A which is a new section under clause 5 requires specified dollar ranges to be reviewed within 12 months of a general election to determine the need to be adjusted to reflect any percentage movement in the Consumers Price Index. And that is the key component of this bill.So I think this is a bill that deserves a lot of merit and consideration. I hope the Government members will take this bill seriously because there are different ways of trying to support families. One is to increase benefits but that only supports those on benefits; it doesn't support low-income families. Another way and a valid way of doing that is to deal with the taxation system and one option is obviously to have tax cuts but this is another option that we proposed prior to the last election which is very meaningful particularly for lower incomes as a way of making sure that people can keep more of the tax dollar so they can keep it to spend it on their families and to look after themselves so they can get ahead and hopefully for some of them may even be able to save a deposit to buy a house which at the moment looks an increasingly difficult proposition for many. On that basis I support this bill and recommend it to the House.DEPUTY SPEAKER: The question is that the motion be agreed to."