2. Question No. 2—FinanceSTUART SMITH (National—Kaikōura) to the Minister of FinanceQuestion No. 2—Finance2. STUART SMITH (National—Kaikōura) to the Minister of Finance: What recent announcements has she made about tax?Hon NICOLA WILLIS (Minister of Finance): The answer to this question is that two weeks ago I released the Government's Budget Policy Statement. This confirmed that there will be personal income tax relief in the Budget and it noted that New Zealanders have not seen any changes to personal income rates and thresholds since 2010 apart from Labour's introduction of a higher top tax rate. Now for 14 years people have been taxed more and more as their incomes have risen much of that due to inflation. This Government will start to address that in Budget 2024.Stuart Smith: What have been the consequences of not adjusting tax brackets?Hon NICOLA WILLIS: I can give the House an example because I'm acutely aware that there are members of this House who adamantly oppose tax reduction for working people. In 2011 the median full-time wage and salary worker earned $48000 and paid 15.5 percent of their income in tax. Today the median full-time wage and salary worker earns $73400.Rt Hon Chris Hipkins: It's because wages are going up—that's a great thing.Hon NICOLA WILLIS: He may not like it but he should listen to the fact because today that wage earner pays 20.6 percent of their income in tax as compared to 15.5 percent in 2011. In other words—Rt Hon Chris Hipkins: They don't like growing wages—they don't like growing wages.Hon NICOLA WILLIS: —and actually the Leader of the Opposition should listen rather than interrupt—the average tax rate for someone who by definition is right in the middle of the income distribution has gone up by more than five percentage points and that has happened because of the neglect and indifference of what long ago was known as the party of the worker.Rt Hon Chris Hipkins: Point of order Mr Speaker. The Government continues on a daily basis to directly challenge your ruling as the Speaker and that was another blatant example of it. Not only did you not stop Nicola Willis for a blatant attack on the previous Government but you actually allowed her to deliver a speech rather than an answer to the question.SPEAKER: Well with all due respect there was quite a lot of interjection going on during that time and I think that while the speech was too long—sorry the answer was too long—Rt Hon Chris Hipkins: I rest my case!SPEAKER: Yeah well I've never been one for long speeches but it was too long an answer. But I don't think that you could say that was an attack on the previous Government. Talking about what has historically happened is not unreasonable and not outside Standing Orders.Rt Hon Chris Hipkins: The last bit of her answer absolutely was.SPEAKER: Well maybe I didn't hear it because of some of the noise that was going on but I will have a look at that on Hansard. I'm trying my best to be fair and even.Stuart Smith: Thank you Mr Speaker. Why is the Government concerned about fiscal drag?Hon NICOLA WILLIS: Well I note there's a lot of sensitivity about the answers to these questions. The fiscal drag—SPEAKER: No with all due respect that doesn't help things either so just start the answer again.Hon NICOLA WILLIS: Sure. Well the fiscal drag I have described affects people at all levels of income. As the years go by they find themselves paying an increasing share of their earnings in income tax and this can affect people's perceptions of fairness in the tax system and as a result have a negative impact on compliance. Also as people move into higher tax brackets they face higher marginal tax rates which can be a disincentive to work. This Government wants people to see a future for themselves and their families in New Zealand where they can get ahead if they work hard and keep more of their own money.Stuart Smith: Will personal income tax relief in Budget 2024 be inflationary?Hon NICOLA WILLIS: No. Tax relief will be funded by reducing Government consumption and increasing revenue elsewhere all sitting within the Budget 2024 operating allowance. Furthermore that allowance will be lower than the allowance set by the previous Government. This means that tax relief is affordable we will not be borrowing extra to pay for it and tax relief will not add to inflationary pressures.