Dunne Peter: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
Text is incorporated into the Bound Volume 
Dunne Peter: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
[Sitting date: 24 May 2012. Volume:680;Page:2459. Text is incorporated into the Bound Volume.] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I think it would be helpful at the outset just to go through what actually is happening here in Part 1 of the Taxation (Budget Measures) Bill. It is very simple and straightforward and it does not necessitate the type of hype that is being generated on the other side. The tax credit for the active income of children was introduced as I said earlier in 1978 and it was done so to reduce the compliance costs of employing children on a part-time basis. What it meant then was that employers with low annual salaries did not need to withhold PAYE in respect of those children. The credit now serves that purpose very rarely because most employers prefer to apply their normal payroll systems including deducting PAYE to all of their employees. The credit is now mostly claimed by a child who files a tax return at the end of the year which means that because the original credit was designed to reduce compliance costs it is no longer achieving that goal and it is actually adding to the compliance costs of those people because they are required to now file a return.  
Let me go through the limited exemption that is being introduced in this particular provision. I want to say this very clearly to members because it is quite important and it is being misrepresented. Children do not need to pay tax on up to $2340 of income that is not taxed at source. So that is money for mowing the neighbour’s lawns babysitting and those sorts of things. The tax exemption does not apply to income on which tax has already been paid such as salary and wages or interest. Well that is unlikely to be a major calculation in this respect. If the child earns more than $2340 from income that is not taxed at source then the exemption does not apply to any of the income because they would have to pay tax on the full amount. So we are dealing with a very specific issue here. It does not amount to taxing the paper boys. Previous speakers have raised the question of the 68600 people or children really who are allegedly affected. They are the people who are in the category of being able to make the claim. We do not have information on the actual numbers of people involved. We know that the average amount of the credit paid is $240.  
Dr Clark earlier in the second reading debate quoted from the regulatory impact statement. Unfortunately his quote was selective. He talked about—[ 
Interruption 
] I think it was on page 3. He spoke about the fact that there could be compliance cost implications for a number of employers. But what he failed to point out was the following sentence which is on page 1 the fifth paragraph: “We expect that very few employers would be in this situation” So here is Dr Clark getting up and saying that this is an outrage because we are now going to have a number of employers having to deduct income from children working for them on very low wages but he did not go on to read the next bit of the same statement: “We expect that very few employers would be in this situation”. 
What this measure is about and the other measures in this part are about is changing and getting rid of a number of small tax credits that have long outlived their usefulness. What members of the Opposition are really saying tonight in opposing this is that they actually think we should keep these things on the books even if they are being misrepresented and distorted. If we are giving up around $350 million to $400 million in revenue over a 4-year period to do so their attitude is “so be it”. What does it matter? It is only money. It comes and goes. It is on the tree that they have the tree that they get it from. This is about responsible Government. It is about making the tax system work the way it was intended and there should not be any more debate about it. 
Tracey Martin 
: Mr Chair—