Key John: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Instruction to CommitteeCWH In Committee 
Key John: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Instruction to CommitteeCWH In Committee 
[Volume:613;Page:10094] 
JOHN KEY (National—Helensville) 
: 
 On those comments we agree with the Minister of Revenue. I want to address Part 1 which National strongly opposes. It sets the annual tax rates in train for a further year. When the Government raised the top personal tax rate to 39c in the dollar it told the people that it would affect only 5 percent of all taxpayers. Well that is not correct at all. In fact one in five full-time taxpayers now pay the top personal tax rate—one in five. 
Lindsay Tisch 
: That is 20 percent. 
JOHN KEY 
: Yes a touch under 20 percent—one in five full-time taxpayers. One in two full-time taxpayers pay the next rate down—between 33c and 39c. 
Hon Dr Michael Cullen 
: Not quite— 
JOHN KEY 
: Well in totality. There is no logic in a top personal tax rate being raised from 33c to 39c. It creates a huge number of costs for the industry and a huge number of compliance issues. It was simply as we know it to be an envy tax—a disincentive for hard-working New Zealanders to go the extra mile to work hard and to create incentives. 
Mark Peck 
: Oh! 
JOHN KEY 
: The member for Invercargill does not seem to think that entrepreneurs and risk takers are worth supporting but on this side of the Committee we applaud those people. 
Hon Dr Michael Cullen 
: It costs me $190 per week. 
JOHN KEY 
: Well the Minister should look at his own tax plan then. I want to raise that issue for a second because the Inland Revenue Department actually tracks individual sector groups and it looks at the total amount of average tax paid by those groups. 
Mark Peck 
: What’s the member’s income? 
JOHN KEY 
: Reasonable. If the Minister would like to refer to those particular sector groups he would find that architects’ average income has gone up and average tax has gone up and plumbers’ average income has gone up and average tax has gone up but that is not so for accountants or lawyers because they have re-arranged their financial affairs to allow themselves to be earning more income and to be paying less tax. So what is the logic behind the increase? It does not work for hard-working New Zealanders who work for companies because they cannot pay themselves in that manner. It works for certain groups it is an envy tax and it is a particularly poor piece of legislation that this Government has saddled New Zealand with. It is one of the reasons why this Government is not a pro-growth Government. 
Hon Dr Michael Cullen 
: We’re doing all right! 
JOHN KEY 
: During 1983 and 1993 New Zealand grew at about 1.8 percent and between 1993 and 2003 it grew at about 3.3 percent. For every year of the last two decades our growth was under Australia’s by about 1 percent. New Zealand will have to perform better if it wants to outperform Australia and if it wants to narrow the gap between what New Zealand families are earning and what Australian families are earning. 
Dr the Hon Lockwood Smith 
: We could pay our rugby players more! 
JOHN KEY 
: That is right. Anti-growth policies like progressive tax rates are not an incentive for hard-working New Zealanders to go forward. 
This part also sets company tax rates in New Zealand. Company tax rates here will be set 10 percent higher than company tax rates in Australia as a result of this bill. The Minister could have sent a very strong message to companies all across New Zealand that he wanted them to compete head-on with Australia that he wanted them to be successful and that for $420 million the Government was prepared to let them do that. The Government could have pre-funded it because part of this legislation attacks aggressive tax planning and it is estimated that the Inland Revenue Department will net between $400 million and $450 million as a result of those schemes being closed down. The Government could have self-funded a wonderful bonus a wonderful Christmas present and a wonderful incentive for the businesses of New Zealand but no it does not want to do that. It wants to rely on its good luck and its good fortune and what has been a competitive exchange rate—and the Minister with his open-mouth policies is trying unsuccessfully to get it back to being competitive. That is what the Government is relying on. It is not sending a hard and fast message and we think that is a complete sham and a complete disgrace. 
We believe that a progressive tax system such as the one we have here is not creating efficiency in the economy is not driving economic growth and will not take New Zealand back into the top half of the OECD.