Adams Amy: Questions for Oral Answer — Questions to Ministers 
Adams Amy: Questions for Oral Answer — Questions to Ministers 
[Volume:663;Page:11509] 
1. 
AMY ADAMS (National—Selwyn) 
 to the  
Minister of Revenue 
: What benefits did the Budget 2010 tax package deliver for New Zealanders and the economy? 
Hon PETER DUNNE (Minister of Revenue) 
: 
 First and foremost the Budget tax package helps tilt the economy in favour of productive investment savings and exports and away from consumption borrowing and unsustainable Government spending. That is essential to create the jobs the higher incomes and the opportunities for Kiwi families to get ahead here in New Zealand. Furthermore the tax package rewards effort it will help to attract and retain skilled people in New Zealand and it makes the tax system considerably fairer. 
Amy Adams 
: How does the Budget tax package make the tax system fairer? 
Hon PETER DUNNE 
: Firstly at all taxable levels the income tax cuts more than offset the increase in GST. Let me give the House three very quick examples of how the package works. Two-thirds of the income tax cuts go towards reducing the bottom two marginal tax rates: the rate for annual income of up to $14000 is reduced from 12.5 percent to 10.5 percent and the rate for income of up to $48000 is reduced from 21 percent to 17.5 percent. Second the tax changes mean that 73 percent of New Zealand income earners will now have a top statutory rate of 17.5 percent or less. Third it is worth noting that a working family with two children will now pay effectively no tax at all until it earns $50000 a year and those who earn below that level will actually receive a net payment under Working for Families. 
Amy Adams 
: How have tax changes over the past 15 years made the income tax system more progressive? 
Hon PETER DUNNE 
: That is an interesting point. If we take together all the changes made since 1996 the group that has benefited the most is those earning between $30000 and $50000 a year which is broadly the gap between the current minimum wage and the average wage. People in this income band are now paying between 40 percent and 50 percent less tax than they were in 1996. In fact people earning just below the average wage of about $48000 who will now pay tax of 17.5 percent will pay almost half of what they were paying 2 years ago. By comparison people earning $100000 a year will pay 20 percent less than they were in 1996. 
Amy Adams 
: Which groups will bear most of the cost of the Budget 2010 tax changes? 
Hon PETER DUNNE 
: The Budget tax changes are obviously not a lolly scramble; every dollar we provide in income tax cuts has to be found from other revenue. Most of those extra costs will be borne by property owners large foreign companies with interests in New Zealand and people who use trusts to reduce their taxable income and to gain access to Working for Families. At the same time we are also providing the Inland Revenue Department with another $120 million over 4 years for it to increase tax compliance measures and police the existing rules. That will raise an estimated further $750 million. It is all part of creating a fairer tax system for all New Zealanders. 
Stuart Nash 
: Why does he consider that the tax package benefits New Zealanders fairly and sustainably considering that the top 5 percent of taxpayers receive 31 percent of the money yet 76 percent of taxpayers earn less than $40000? 
Hon PETER DUNNE 
: I think I answered that question very clearly earlier on. People who are earning $48000 or less will now pay a top marginal rate of just 17.5c in the dollar. That is half of what they would have paid 2 years ago. They are the major beneficiaries of this package.