Burns Brendon: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
Burns Brendon: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
[Volume:672;Page:18935] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I take the first opportunity in this debate to acknowledge that the Government is making some effort in respect of the recovery in Christchurch. I acknowledge also that it will of course be hard-working New Zealanders who provide the money for that recovery through their taxes and that is what is provided for in clause 3. 
I also want to pick up on the point made by my colleague Mr Nash about taxes being paid by particular sections in the community. I acknowledge too that we have a situation in respect of the dairy farming community where tax liabilities are also created because of the failure of the Minister for the Environment who is sitting opposite to deliver in the national water policy statement of last week any mechanisms for environmental control. So we have taxpayers funding the clean-up of some of the inputs that the dairy industry provides. We need only look at the lakes in Rotorua and at the Waikato River for examples of where taxpayers through their annual rates set in bills like this one are paying twice in effect. Not only is tax not being paid effectively by many across that sector but also we are paying through taxes for the clean-up. 
Then of course provided for under this Budget will be the irrigation schemes which the dairying industry will with others be a major beneficiary of. That of course will also be funded by taxpayers—ordinary hard-working taxpayers who on about a $50000 income are paying 10 times what at least in one recent financial year some dairy farmers were paying. That is a matter of fairness and equity and it is simply not acceptable to have that kind of imbalance in the taxes being paid by two sectors of society. 
The Prime Minister commented today that the largest amount of tax is paid by a relatively small part of the community and that is always the case when we have a progressive tax system. This part of the bill is implementing that progressive tax system and I for one believe that that is an appropriate tax system for us in New Zealand. Just last night I attended the graduation of my daughter from Victoria University. She graduated as a primary teacher. I was a very very proud father there last night amongst many many others; there were many other parents there. Those students of course will have contributed somewhere around 20 percent of the cost of their tertiary education. We as taxpayers will have contributed 80 percent as provided for under the clause in this bill where we have set the annual rates for our taxes. 
But I make the point that those students as they graduate and go into high-earning jobs will be the beneficiaries of the stable and orderly society that we treasure in New Zealand. How do we provide for that stable orderly society? We provide for it through our taxes. We provide for it through parts of bills like this one tonight. 
We have rules in our society and those at the top end are generally as much if not more the beneficiaries of those rules as those at the bottom end. Things like the courts things like regulations in business and things like tenancy requirements are all paid for overseen supported and facilitated through the taxes we pay and we as taxpayers also get back benefits for those. Those of us on higher incomes tend to get more benefit back because we get the regulations in business and tenancies and things like that which lower-income taxpayers may not be receiving even if they might sometimes be getting more in terms of particular other benefits. 
We get a welfare net and we get the provision of health care and I would rather live in a society where somebody is able to go to a hospital provided for in a health system funded through our taxes through clauses like this than have the system we see in other countries where as David Lange once put it: “They feel for your wallet before they feel for your pulse.” That is part of having a progressive tax system. 
Of course the Government makes much play sometimes about the fact that it has cut taxes and it points to the fact that there have been three tax cuts across the last 3 years. But it usually fails to take account of the fact that the first of those tax cuts took place under the guidance of Dr Michael Cullen and that those tax cuts were really sheeted home to lower and middle income earners not to the top end of town. We have seen in the latest two tranches of tax cuts without any doubt that the top end of town has been the real beneficiary and we have seen some of the figures on that provided to the House on numerous occasions. 
I will pick up on some of the commentary in the Economic and Fiscal Update as tabled today by the Minister of Finance around tax matters. I say to the Minister that on page 80 it is acknowledged that we are yet to see a full year of GST at the new 15 percent rate. I just wonder whether the Minister can give us any assurance as to whether there is any work consideration going on for any further lift in the GST rate under the potential of a re-elected National Government should he still be there as part of that. I think that is an important question to ask. 
I also draw attention to page 82 of the Economic and Fiscal Update which is reflected I think by this bill and the annual setting of the tax rates and to the differential between Treasury and the Inland Revenue Department in respect of the tax revenue forecasts and as Treasury— 
Craig Foss 
: All Budgets always use Treasury forecasts. 
BRENDON BURNS 
: No but Treasury notes that the Inland Revenue Department has produced a set of tax forecasts that are much lower than Treasury’s— 
Craig Foss 
: Read the whole paragraph. 
BRENDON BURNS 
: —much lower than Treasury’s. In this update— 
Craig Foss 
: Read the whole thing. 
BRENDON BURNS 
: —yes I will—the total difference between those tax forecasts across the 5 June years 2011 to 2015—it is on page 8; it will help the member with his own guidance—is nearly $4 billion. That is not an amount to be sneezed at or to be dismissed as just a minor variation between two Government departments. It is an actual $4 billion difference in projections between— 
Craig Foss 
: Four years. 
BRENDON BURNS 
: That is right and that is a billion dollars a year in anybody’s language. A billion dollars a year is not to be sneezed at. Why has that come about? It has come about because the Inland Revenue Department is less upbeat on the business tax— 
Craig Foss 
: At the same time they upsized the risk— 
BRENDON BURNS 
: That is right. The bulk of the difference—I am again quoting from the papers—is the difference in estimates for corporate tax because Treasury is upbeat. It is saying the corporate sector is bouncing back. The Inland Revenue Department which is a less political organisation if you like is simply there to make sure that the revenue comes in to meet the needs and objectives of the Government. It is simply there for that reason and it is simply not prepared to be as upbeat as that on that issue. 
I refer the member opposite and the Minister in the chair the Minister of Revenue to the regulatory impact statement for this bill which refers to the issues of KiwiSaver. That is another issue of analysis by credible officials. It is actually an analysis by both Treasury and the Inland Revenue Department if my memory serves me right. It has I think the Inland Revenue Department’s fingers all over it because it is talking about the department’s concern that we are making changes to KiwiSaver when it is less than 5 years old. It was launched only in 2007. There have already been several significant changes to contribution requirements. Who made those? Those changes were made in 2008 and 2009 by the National Government which wanted to fund the first round of its tax cuts. So it took away the 2 percent contribution. 
Craig Foss 
: Half the people are on 4 percent now. 
BRENDON BURNS 
: Yes it did. It took it away and now it is going halfway back to reinstating it because we need a new savings regime. Here is what the department says about that in the regulatory impact statement: “The KiwiSaver industry has not experienced any period of stability in which to establish its core products and this uncertainty and unpredictability is not helpful to either the industry or savers.” The National Government’s track record on this issue is appalling dating back to Muldoon.