Sharples Pita: Income Tax Bill — First Reading 
Sharples Pita: Income Tax Bill — First Reading 
[Volume:635;Page:6800] 
Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
 The Income Tax Bill is the final instalment of an income tax legislation tidy-up project. It is a mammoth bill with indeed volumes of parts and clauses transitional provisions binding rulings and accrual determinations. Let me say from the outset that the Maori Party places great emphasis on policy advancements in the area of income tax. Our motivation is clear: we want to raise the standard of living of all individuals in this country especially those on lower incomes. 
We know that 1.9 million taxpayers in the 2004-05 financial year earned $25000 or less. It is evident that the fruits of economic growth so frequently lauded in this House have not resulted in the equitable distribution of wealth. We question the fairness of tax rules that allow the wealthy to receive income free of tax while those on low incomes pay tax on every dollar they get. We believe that tax reductions should be driven by improved efficiencies and savings in the public sector. Our long-term aspiration is to review all Government systems and expenditures including outgoings for and on behalf of the Maori partner to the Treaty for efficiencies and savings that can be identified. These are the goals and indicators that the Maori Party would look to a healthy income tax infrastructure to provide. 
Yet what do we have here? The bill is merely a redraft of existing policy. In effect the re-write project illustrates the futility of concentrating on the somewhat trivial details when the wider tax context and the thinking that drives it is in crisis. It is an opportunity lost. The explanation for the changes is that the rewrite project will be completed by re-enacting Parts A to E consolidating amendments made to those parts since the commencement of the Income Tax Act 2004 and then rewriting parts F to O in the same style as Parts A to E. Well I suppose that means something to Mr Dunne and this Labour-led Government but what does the bill actually do? The Maori Party of course supports the move to make the legislation clear. If taxpayers can understand their obligations by those obligations being set out in plain language and within a consistent structure it is much more likely that they will be income-tax compliant. But the basic problem is that the touch-up job that is being applied today will happen without any changes to the essential policy content. 
Where are the proposals to raise the maximum level of income that a person may earn before tax kicks in thereby ensuring that beneficiaries and low-income earners do not pay tax? They are not in this bill. Where are the strategies to reduce personal tax rates across the board? They are not in this bill. Admittedly some minor changes have been made. They are changes made in the interests of clarity or simplicity and changes approved by the re-write advisory panel in consultation with tax professional groups. There is also a rather bizarre bit of legalese which is included as a cautionary note in this bill. It states that if in the initial years of the Act’s operation it is found that the Act produces a different result from that which would have been produced under the current Act the Government will promote a remedial amendment to correct the position from the date of the commencement of the new legislation. Now I am trying to work that out. Is that a guarantor’s clause for the Government so that if it all turns to custard then the Government can write it off as a United Future mistake and claw back some brownie points with the voters? 
The Maori Party will not be supporting this bill. We have been looking at the policy context around income tax in quite a different way to a simple cosmetic exercise to dot the i’s and to cross the t’s. We have been asking questions around the very myth of the benefits of growth. In current philosophies the tax argument appears to be confined on the one hand to cut taxes for more investment and therefore more growth or on the other hand to maintain taxes for social services. But the key question is the very basic relationship between tax and who gets rich and who stays poor. In whose interest does the current tax policy really work? Where does the money come from for the growth and who really benefits from it? If we look at tax with quite a different set of eyes—say under the framework of a genuine progress index—we may find that those who are being rewarded by tax incentives are actually those who are exploiting natural resources. Is that really progress? How does the bill fit with the Government’s newly acquired concern for the environment and its new green image if those tax incentives for environmental exploitation remain? As I have already said an opportunity for change has been lost. 
As this House should be aware by now the policy framework for the Maori Party is informed by our commitment to the awareness of genealogy of whakapapa of origin. We believe that everything has a whakapapa and everything has a genealogical base. This tax bill has a whakapapa and perhaps we should consider its parentage and its origins which are the crossing of welfare State tax collection to fund particular policy objectives with the enterprise State tax reductions and the introduction of user-pays. But what has been the result? The result has been significantly lower tax for high-income earners but actual tax increases for “Joe Average” and the poor. By 1992 the changes made to tax policies meant that high-income earners paid 17 percent less tax and middle-income tax earners paid 8 percent more while those with the lowest incomes paid a staggering 35 percent more tax. Jumping forward to the present day those who have a student loan to pay off will likely pay in excess of 40 percent of their income in some form of tax: income tax; GST; student loan repayments; and now KiwiSaver contributions for their retirement. This partnering has not been fruitful for a great number of people. 
We have also scrutinised the bill to see whether this framework will produce the desired results of a creative community where the benefits including financial wealth creation potential through technological creativity are retained in the ownership of our citizens. We are thinking of the long-term vision not the tidy-up of today. We see tax incentives that will encourage entrepreneurship and make more surplus finance available for new business formation and for reinvestment. The Maori Party is motivated by the desire of tangata whenua to attain growth and sustainable prosperity measured by a genuine progress index. We are looking for long-term visionary approaches that maximise the wealth evident in our cultural capital our enterprise our entrepreneurship and our greatest resource our people. This Income Tax Bill does nothing to shift our sights forward and because of that the Maori Party will not be voting in its favour.