Foss Craig: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
Foss Craig: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
[Volume:644;Page:13737] 
CRAIG FOSS (National—Tukituki) 
: 
 I am speaking to the title of the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters Bill. As I keep noting this debate incorporates many many Supplementary Order Papers some of which are very very fresh off the press. 
I think this bill should actually be renamed the “Sorry the Government Spending Has Dragged You Into a Higher Tax Bracket Bill”. Because as Dr the Hon Lockwood Smith just noted with Government spending New Zealand workers are being dragged into higher and higher tax brackets. In fact the infamous “chewing gum tax cuts” announced in the 2005 Budget were dragged off the table and are now no more than a piece of dodgy disgusting chutty on the bottom of some school desk somewhere. They are long forgotten. But as Dr Smith just noted election year is coming up and funnily enough tax cuts are being talked about. 
If the Prime Minister wrote the bill perhaps it would be entitled the “Oops Sorry Treasury Got It Wrong Bill”. Apparently the Prime Minister’s road to Damascus conversion on tax cuts has come about and previous lack of tax cuts are all Treasury’s fault because its forecast was so wrong over so long. In fact—I tell members just as an aside—Treasury produced some papers recently that point out its forecast has not been wrong. It has been predicting surpluses for quite some time and it has just projected a structural forecast further out. 
Perhaps this bill should be the “We Just Thought of Something About Redundancy (We Have Had a Chat to the CTU) Bill”. I would like to talk about the redundancy clauses of this bill. The redundancy provisions were picked up in the Supplementary Order Papers and there were public relations statements from both Ministers Dunne and Cullen. But I raise the point again about the redundancy rebate clauses in this bill. They have never been aired. They have never been aired in this forum. They have never been aired in a select committee. They have never been discussed by this Parliament. We have not received advice from officials on this—absolutely never. These provisions have never been debated in this Chamber up until the last 15-odd hours. They have never been debated in Committee with cross-party buy-in to try to make some decent legislation. Even if philosophically National might disagree with it we would try to contribute and help. 
The redundancy rebate has never been challenged out in the public by those taxpayers who at the end of the day will have to be funding this. It has never been challenged by those who perhaps want some of this tax revenue spent somewhere else—be it on hip operations education student loans or whatever. It has never been challenged other than in a dodgy discussion in a backroom in some Minister’s office up in the Beehive. 
The redundancy rebate has never been quantified or qualified. How much is it? What will it cost? What is the fiscal impact? National has Supplementary Order Papers pushed aside because of the supposed fiscal impact of them some of which is quite minimal. What is the fiscal cost of the redundancy rebates of 6c in every dollar up to $3600? What is the cost? What is the study historically? How does that rewrite the accounts? How does that rewrite the forecast accounts? 
This bill is part of a suite of bills that fell out of Budget 2007 which is a good reminder of the confidence and supply issue. I guess the confidence and supply issue is why the Greens over there are abstaining on this bill and of course why National is voting against it. We do not have any confidence in the supply of funds to the current Government. 
The title of the bill I think is quite misleading. There are some absolutely classic quotes that came from Dr Cullen’s and Minister Dunne’s press releases that I think will come back to haunt them. This is their road to Damascus. Dr Cullen has essentially said that he likes a flat tax rate of 6c in the dollar for any redundancy payments. That is actually what he says. I will read to members perhaps with a minor change or two what he said and this could be the title of the bill. Dr Cullen and Mr Dunne said yesterday when talking about redundancy that taxation payments should be fairer to people who are pushed into a higher tax bracket when they receive redundancy payments—and they extended it to lump-sum payments. Well income is income. If one tries to argue that this income should be treated differently by the Inland Revenue Department than one’s own income then one is in trouble. The department will go after that person. If one keeps it simple—“keep it simple stupid”; give the department a big kiss if you like—one sees income as income. The complexity that this starts to bring into the tax system is not welcome. 
Another point is that the redundancy rebate is not quite as generous as the Ministers have announced because it has to be claimed. It is not a rebate. A person does not suddenly get a cheque when he or she receives redundancy pay. It has to be claimed.