Smith Lockwood: Taxation (Annual Rates and Urgent Measures) Bill — In Committee 
Smith Lockwood: Taxation (Annual Rates and Urgent Measures) Bill — In Committee 
[Volume:628;Page:761] 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Part 2 which implements the Government’s expanded Working for Families package deserves real scrutiny. This expanded Working for Families package will bring 60000 more New Zealand families into a policy that I would call instead of Working for Families “Working for Government”. Let me explain why I would call this package “Working for Government”. 
Let us take the example of—once this package is implemented—people who are on the domestic purposes benefit but seeking to get off it through working more and more hours to earn more of their own keep and their families’ keep. Once a person on the domestic purposes benefit with three children earns a wage or salary to the tune of $10000 a year from there to $25000 a year he or she pays tax of 92.2c in the dollar on every extra $1 he or she earns. I will repeat that: 92.2c in the dollar. I see the Minister of Finance shaking his head. I am quoting Inland Revenue Department figures. I have the department’s official tables right here. The tax rate for a single adult with children who is moving off the domestic purposes benefit— 
Hon Dr Michael Cullen 
: That was the case when you were the Government. 
Dr the Hon LOCKWOOD SMITH 
: These are the latest figures provided by the Inland Revenue Department in the last couple of weeks. Once this package is fully implemented for income earned from $10000 to $25000 a woman with three children who is trying to earn a bit more money to help her family pays Dr Cullen 92.2c out of every $1. Why does he hate women with children so much? Why does he destroy their hope? Where is the hope? I see that little fellow over there Darren Hughes laughing. Does he understand how many extra hours of work that is for a woman on the minimum wage? How many extra hours of work a week will it take before she gets off that 92.2c tax rate? It will take 30 hours of extra work a week at $10 an hour. 
I want to know how the Minister justifies that. It is the same for a family trying to move off the unemployment benefit. In fact a woman who is trying to move off the domestic purposes benefit does not keep more than half what she earns until her salary is over $100000 a year. Then finally if that woman has three children her marginal tax rate comes down to 39c in the dollar. Until that point she pays 60c or 54c except for a wee window at $30000 of income when she pays a 22c marginal tax rate. Apart from that her marginal tax rate for income from $10000 onwards is 92.2 percent for a $15000 range of income. For 30 hours extra work a week at $10 an hour she keeps out of every extra dollar she earns 7.8c. 
Darren Hughes 
: Would the member answer a question? 
Dr the Hon LOCKWOOD SMITH 
: I want Darren Hughes to tell this Committee why Labour thinks a woman with three children two children or one child should when she is trying to earn more money for her family give him and Dr Cullen 92.2c out of every extra dollar she earns so that she keeps just 7.8c out of every dollar. 
Darren Hughes 
: Does the member need a tax cut? 
Dr the Hon LOCKWOOD SMITH 
: I want Darren Hughes to explain why if that woman is independent of the benefit system—not on a benefit but on a similar income range—and she earns an extra dollar she has to give Dr Cullen the lot. Someone who is independent of the benefit system under this Working for Families package—and I say “Working for Government”—gives him the lot. In fact 3500 more families will come into this regime now according to Dr Cullen’s officials. One thousand families are caught in it this year; once Working for Families is fully implemented 4600 families that are independent of the benefit system will find that for every extra dollar they earn in the income range from $10000 to $20000 they give Dr Cullen the lot. Their marginal tax rate will be 101.2 percent. If they earn another dollar they will give all of it to Dr Cullen. 
These are our lowest-income families. I do not blame Dr Cullen for having established this regime—actually it was established when he was in Government in the late-1980s—but it is time to do something about it and this “Working for Government” package should relieve those low-income people of that burden.