Gilmore Aaron: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Gilmore Aaron: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 24 March 2010. Volume:661;Page:9756. Text is incorporated into the Bound Volume.] 
4. 
AARON GILMORE (National) 
 to the  
Minister of Finance 
: What issues will the Government consider in deciding on its tax package for the Budget? 
Hon STEVEN JOYCE (Associate Minister of Finance) 
 on behalf of the  
Minister of Finance 
: There are a number of considerations for the Government. Any changes need to contribute to a better-performing economy. We need to encourage more productive investment savings and exports and have less borrowing consumption and Government spending so we can increase the wealth of families in New Zealand. The tax system is one large policy lever we can pull to achieve this. Unlike the previous Government which was all talk and no action around the economy this Government is doing a number of things to turn round the economy. For example we are investing billions of dollars to build schools ultra-fast broadband electricity transmission and roads—all of which will help increase productivity create new jobs and help families get ahead. 
Aaron Gilmore 
: What will the Government take into account when considering options for improving the tax system? 
Hon STEVEN JOYCE 
: Another important issue is ensuring the tax system is fair and equitable for all New Zealanders. That is why our starting point is considering personal income tax cuts across the board not just for those on the top marginal rate. The vast bulk of households will be better off as a result of the package of tax measures in the Budget delivered on 20 May. We will also make sure that individuals’ taxable income more accurately reflects their true income and we will move from a system that has nominally high tax rates which both harm growth and are being widely avoided to one that is fair to all taxpayers. 
Stuart Nash 
: Talking of “fair” and “equitable” how will tax rate alignment and significantly reducing the top marginal rate for the 8 percent of New Zealanders earning over $70000 benefit the 70 percent of Kiwis earning under $40000? 
Hon STEVEN JOYCE 
: I note that according to a number of surveys the proposal to reduce tax rates across the board is widely supported by New Zealanders. I think it is important to point out to the member that we currently have a tax system that taxes labour and investment income at relatively high rates taxes consumption at relatively low rates and generally gives money back to people when they invest in investment property. Therefore is it any wonder that our economy is tilted towards consumption and property investment that we have a shortage of savings and that a high proportion of our skilled labour lives overseas? Those are the problems we have to solve. 
Stuart Nash 
: I raise a point of order— 
Mr SPEAKER 
: Before I call the next question I say that that was a very interesting answer but I am not sure it said anything about how changes to the top tax rate would assist someone under $40000. I invite the Minister to answer the question asked. 
Hon STEVEN JOYCE 
: I was making the point that if we did not reduce the top tax rate then a number of things would not happen. That is what I was seeking to explain to the member. 
Mr SPEAKER 
: If the member has a further supplementary question he can explore it further. 
Aaron Gilmore 
: What are some of the problems with the current tax system that means it is neither fair nor equitable? 
Hon STEVEN JOYCE 
: The Tax Working Group identified a number of problems that show that the current tax system is unfair for hard-working New Zealand families. For example since the previous Government increased the top personal tax rate there has been very slow growth in the number of taxpayers reporting higher incomes compared to growth rates in earlier years and a major spike in those earning almost exactly $60000 a year which was quite magical. This is most evident for people earning more than a million dollars a year. Between 1999 and 2007 the number of people in this category barely grew at all unlike previous years indicating a greater use of income sheltering and undermining of the integrity of the tax system. 
Hon Ruth Dyson 
: You’d know all about that. 
Hon STEVEN JOYCE 
: Careful. The Government will make a number of changes that will not only make the tax system fairer and more equitable but also help increase productivity and exports. 
Hon Sir Roger Douglas 
: In deciding on the Government’s tax package in this year’s Budget why does he intend to trade off horizontal equity for vertical equity as he indicated in an earlier reply today when horizontal equity—that is the same treatment for taxpayers with the same capacity to pay—is likely to increase savings investment and entrepreneurial activity and to lift our productivity growth? 
Hon STEVEN JOYCE 
: The Government acknowledges that high marginal tax rates are a disincentive to people to work hard and get ahead but by the same token the Government thinks it is inequitable in the New Zealand context to have flat income tax rates which I think is what the member was proposing in his question. 
David Garrett 
: How can taxpayers have any confidence in this year’s Budget when Paul Morgan and Wayne Mulligan can rip off Tekau Plus to the tune of millions and all the Government will do is call for a “value-for-money” audit when the Minister should be asking the Auditor-General or the Serious Fraud Office to conduct a fraud investigation? 
Hon STEVEN JOYCE 
: I raise a point of order Mr Speaker. That is a fair way outside the original question. 
David Garrett 
: Speaking to the point of order— 
Hon Trevor Mallard 
: Can I speak to the point of order? 
Mr SPEAKER 
: The member who asked the question was on his feet first wishing to speak to the point of order. 
David Garrett 
: The primary question uses the word “issues”—what issues will the Government consider? Surely one of the prime issues must be the integrity and the use to which money is put and the controls on the use of that money given that it is taxpayers’ money. That has to be a primary issue surely. 
Mr SPEAKER 
: I will hear the Hon Trevor Mallard very briefly. 
Hon Trevor Mallard 
: I would like in fact to defend the Minister. That question was well wide of the primary question. There might be an issue around the level of revenue to be got and if a supplementary question had led to that it could have been possible for the member to get there but— 
Mr SPEAKER 
: I think we have spent enough time on it. 
Hon Trevor Mallard 
: —this issue is about revenue. 
Mr SPEAKER 
: We have heard enough. Rather than just rule the member’s question out of order I invite the member because he asked a question in good faith to ask a question that does relate to the primary question. Although David Garrett mentioned the word “issues” in the question it is issues in respect of the tax package that the primary question covers. So I invite the member if he would like to to ask a supplementary question that is consistent with the primary question. 
David Garrett 
: Does the Minister intend to conduct investigations where there is good evidence that taxation moneys have been ripped off? 
Hon STEVEN JOYCE 
: In terms of the tax package the Government is definitely working to improve the quality of our taxation system to ensure that tax avoidance and evasion are much less able to be done but I have no comment to make on the individual case the member mentions.