Tremain Chris: Income Tax Bill — In Committee Third Reading 
Tremain Chris: Income Tax Bill — In Committee Third Reading 
[Volume:641;Page:11293] 
CHRIS TREMAIN (National—Napier) 
: 
 I rise for a third time to speak to the Income Tax Bill and specifically to reply to Mr Charles Chauvel a colleague on the Finance and Expenditure Committee—and an intelligent member of that committee I might add. He stood up here today and told us—he waxed lyrical—about headline tax rates and Labour’s record on them. I just remind the member that Labour increased the headline tax rate to 39c in the dollar in 1999 immediately after coming into Government. If that is not increasing the headline tax rate then I do not know what is. Let us have a look at the effect of that headline tax rate the effect of inflation going forward and the effect of bracket creep with regard to where the average Kiwi has now ended up as a consequence of the economy and that increase in the headline tax rate. 
Dr Cullen told us in 1999 that 95 percent of Kiwis would remain outside that headline tax rate. Well the fact is that that is in no way the case now. Treasury’s  
Key Facts for Taxpayers 
 released on Budget day tells us that that 14 percent of Kiwis are now paying at or above the high headline tax rate. So I ask Mr Chauvel how that shows a good record in terms of the headline tax rate. I just cannot see that for the life of me. 
The other thing which is probably more important is the situation of the average Kiwi. I tend to focus on where the average Kiwis are at with regard to their tax contribution to the country not those “high price” guys. What is important is the average hard-working men and women and what has happened to them. Tax creep over the last 8 years has pushed them from 19.5c in the dollar to 33c in the dollar to 39c in the dollar and what we have seen is an average increase in personal income tax of $2400. So once again I struggle to see how there has been an improvement for the average taxpayer in this country. We are talking tax here in relation to the Income Tax Bill. 
The second point Mr Chauvel went on about was that the facts speak for themselves in terms of economic performance. He then went on to talk about interest rates. Interest rates are only one part of the economic pie. What we need to look at is the result of economic performance. Let us look at our overall wealth as a nation—the average wealth of the average Kiwi. This Government told us early in the piece that its goal was to get us up into the top half of the OECD. That was a big goal. Helen Clark and Michael Cullen proudly set out that goal and I admire that goal. It is a goal we should be aiming at. I fully endorse that. The reality is however that we have dropped two places. So under the structure of the Income Tax Act as it is now New Zealand has dropped two places in the OECD. I say to Mr Chauvel that in terms of economic performance we have come down the ladder. 
This debate has been broad and I want to bring it back to more specific comments about some specific changes brought to the select committee. I want to comment firstly on some of the comments made by some of the submitters. There were not a lot of submitters on this bill. KPMG and the Institute of Chartered Accountants of New Zealand made some specific calls in terms of the definition “permanent place of abode” versus “permanent home”. The advice was initially that they change the definition to “permanent home” as opposed to “permanent place of abode”. It was subsequently decided that that change in definition would have an impact on the legislation so it was decided we should stay with the initial definition. 
The second thing that the Institute of Chartered Accountants recommended was around the definition of “close relative”. The initial definition did not include a surviving spouse a civil union partner or de facto partner. But the revised addition after advice was given by Therese Turner and Sir Ivor Richardson was that the definition should be changed. So the new definition of “close relative” was revised to include “a surviving spouse” and “a civil union partner and/or a de facto partner”. 
There was some discussion about where some other definitions in other legislation should be pitched. Some submitters said that all the definitions should be placed in this legislation.