Key John: Income Tax Bill — Instruction to Committee In Committee Third Reading 
Key John: Income Tax Bill — Instruction to Committee In Committee Third Reading 
[Volume:616;Page:12077] 
JOHN KEY (National—Helensville) 
: 
 I want to go back to the point that Richard Prebble first raised in his speech. It was the very interesting issue about the special rate of taxation applied to Maori trusts at 19.5 percent. We live in a world where the Government wants us to believe that there is one rule for everyone. Well I have been flicking through all 2307 pages of the bill looking for the rate of taxation for another sort of New Zealand business at 19.5 percent. I have looked at clause after clause and I cannot find it because the rate of taxation for a company in New Zealand is 33 percent. 
When someone sets up a company in New Zealand the Inland Revenue Department does not ask: “What do you think your average income will be?”. The department does not come to someone and ask: “Do you think you will be earning less than $38000 a year and therefore your income might be less?”. The department does not come to someone who sets up a personal trust and ask: “Excuse me Mr Key do you think you will be earning less than $38000 a year in your trust and therefore the rate will be a different rate from 33 percent?”. No the Inland Revenue Department taxes a company whether it is small or large a trust whether it is small or large and a partnership at 33 percent. Readers of the bill may be just a little bit shocked at why there is a special unique rate of taxation for Maori trusts at 19.5 percent and that is a very good question. I ask Mr Cosgrove why that is the case. 
Clayton Cosgrove 
: You’re telling a story. 
JOHN KEY 
: Yes I am telling a story and I will be turning the pages as well. I will tell members the reason. It is because it is deemed that the end-users of those trusts are unlikely to have income greater than $38000 a year. Therefore it is deemed that in the hands of the receipt holders it is pretty likely that their rate of taxation will be 19.5 percent. Rather than make them go through the hassle of having company tax withheld at 33 percent and therefore having to make a claim on the Inland Revenue Department at 19.5 percent and receive the benefit we may as well just get on with it and tax them at 19.5 percent in the first place. That sounds pretty logical to me. It is logical if it is a Maori trust. It is OK to assume that Maori trusts will earn less than $38000 a year and therefore be taxed at 19.5 percent. But if I wander down to the Inland Revenue Department in my home seat of Helensville and say: “Can I please be taxed at 19.5 percent?” they will laugh. They will show me the door. They will say: “Mr Key yours is not a Maori trust. You can’t have a special rate of taxation. We’re not in the process of dishing out special rates of taxation to anybody who wanders in the door. If you were a Maori trust then you could be taxed at 19.5 percent.” 
When the Coordinating Minister Race Relations the Hon Trevor Mallard does his review I wonder whether this special rate of taxation will be on his radar screen. I predict that when this is exposed for what it is as it truly will be—for the unusual position shall we put it that way compared to other trusts in the country including other community trusts—I suspect that a very sensitive Labour Government will change the position. That is my prediction. If we start setting rates of taxation on what we believe the final end-user to be—incorporations and trusts—that is fine. I do not necessarily disagree that that cuts down on the paper work the administration and the hassle but I say let us have it for everyone. Let us have that for the John Key family trust if he thinks that that rate of taxation will be lower than 19.5 percent. [ 
Interruption 
] I am happy to pay my fair share of taxation. But if my earnings will be less than $38000 then I welcome the opportunity to tax myself at 19.5 percent. 
Jill Pettis 
: One ornament on your mantelpiece would keep us in clover. 
JOHN KEY 
: I am sorry; I cannot hear all the screeching that is coming from the other side of the Chamber. There is a whole lot of noise going on. What did Mrs Pettis say? 
Jill Pettis 
: I have seen a picture of your mantelpiece in the paper. 
JOHN KEY 
: I am sorry but the Inland Revenue Department does not tax mantelpieces. That is not what it looks at when it is taxing things.