Boscawen John: Taxation (Urgent Measures and Annual Rates) Bill — Third Reading 
Boscawen John: Taxation (Urgent Measures and Annual Rates) Bill — Third Reading 
[Volume:651;Page:281] 
JOHN BOSCAWEN (ACT) 
: 
 I started my address last night at 3 minutes to midnight and I was commenting on some of the questions and issues raised by the Opposition. 
The previous Minister of Finance the Hon Dr Michael Cullen asked the House why so many people were leaving for Australia. I commented that in Australia living standards are much higher and after-tax wages are also much higher. 
The Hon David Cunliffe suggested to Craig Foss that the reduction in the top marginal tax rates was some sort of utu; that reducing the top tax rate from 39c to 37c was some sort of utu or revenge. I say to Mr Cunliffe that no it was not. It was the previous Government’s McLeod report on taxation that called for the top tax rate to be dropped from 39c to 33c. This is the first of many moves that I hope the National Government will make to reduce the top tax rate from 39c to 33c—and it needs to go lower. 
I also noted the sarcasm in the comments of Moana Mackey and the Hon Jim Anderton on research and development incentives. The Hon Mr Anderton said that there was no mention of agriculture or exports in the Speech from the Throne. That member seems to forget that he voted for what was probably one of the biggest taxes on agriculture that this Parliament has ever passed in the form of the emissions trading scheme. I am very proud to be part of a Government and a party that have ensured that there will be a full review of the emissions trading scheme. If Mr Anderton wants to vote for that select committee review he will have an opportunity to do so later. 
I turn now to the question of tax rates and tax brackets. The argument has been made that these tax changes are somehow an attack on the poor. Well over the last 9 years we have had a significant increase in Government expenditure; an increase in Government expenditure per capita and inflation adjusted of in excess of $1000 per month or $12000 per year. This tax bill simply restores the tax thresholds of people on low incomes who pay that lower tax rate of 21c; it simply restores the position of 9 years ago. In respect of higher tax payers it does not. There is more work to be done. 
The key issue of this tax bill is to provide an incentive for people who want to work hard get on with their lives earn higher incomes and contribute to their families’ well-being and the productivity of this country. One of the great problems we have with our tax system is that we have perverse incentives for people to split their income and to enter into schemes that reduce their taxable incomes. When we have a high marginal tax rate of 39c we are incentivising people not to work and to enter into schemes that can help reduce their taxable incomes. 
My colleague the Hon Sir Roger Douglas was a very proud Minister of Finance in the fourth Labour Government. Comments yesterday from the Opposition referred to the effect that these tax rates will have on those on lower incomes. Well those folk on lower incomes generally fall into three categories and that is what Mr Douglas tried to explain to the House. They are either beneficiaries which I will come to very shortly or they are the children and spouses of those on higher incomes who split their incomes or those who have assets of high value and live off the income from their assets. The position with beneficiaries is that benefits paid to beneficiaries are based on after-tax income. We could actually drop the tax rate from 39c in the dollar to 1c and it would not make a single iota of difference to the net income paid to beneficiaries because beneficiary income levels are based on net income not gross income. Mr Douglas is very proud that he was the Minister of Finance who put that reform into place. 
I will finish as I started in the first reading of this debate by commenting on the Speech from the Throne. The Speech from the Throne highlighted that this country needs to lift its productivity levels and its income levels. What will be fundamental to making those changes over the period of this Government will be a tax system that encourages and incentivises those people who want to get on with their lives improve their incomes and improve the lifestyles of their families.