Parker David: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers[Sitting date: 20 May 2014. Volume:699;Page:18079. Text is incorporated into the Bound Volume.]4.Hon DAVID PARKER (Deputy Leader—Labour) to theMinister of Finance: Does he agree with the reported statement last Friday from the Prime Minister who would not rule out an increase in GST?Hon BILL ENGLISH (Minister of Finance): I agree with the Prime Minister’s comment on radio last week when he said: “Our general view is GST at this current level is about the right setting.” I also agree with the Prime Minister’s comment that the Government has not decided whether to undertake a tax reduction programme let alone the design of it. However he has also made clear the question of whether GST would rise as part of any tax programme and the answer is no.Hon David Parker: Why should New Zealanders believe him when he says that he will not increase GST given that the Prime Minister promised in 2008 he would not increase GST but then did just that in 2010?Hon BILL ENGLISH: The member misrepresents the comments in 2008. The tax package including an increase in GST was put to the test in the 2011 election and as I recall the Government of the time won that election. There will not be any increases in GST.Hon David Parker: Did John Key check with him before the Prime Minister flew his kite about GST increases and tax cuts; if so why did he the Minister of Finance appear blindsided? Was it because the Prime Minister thought his budget so underwhelming he wanted to distract attention by flying his kite?Hon BILL ENGLISH: In answer to the second question the Prime Minister has been of the view that the Budget has been an overwhelming success and I too am expecting the donation of a bottle of wine to appear in my office to indicate a bit more gratitude.Hon David Parker: Is John Key the person he said bounces from cloud to cloud; if so is it time to remind him that 40 percent of his 2010 income tax cuts went to the top 10 percent of income earners which everyone paid for through an increase in GST?Hon BILL ENGLISH: Any comment I have made about the Prime Minister is much more flattering and supportive than almost anything the Labour caucus is saying about its leader. I am sure that pattern will persist through to the election. Secondly the member is simply wrong about the 2010 tax cuts. Analysis produced at the time showed they weredistributionally neutral—that is they had a similar impact on taxpayers of all income levels.Hon David Parker: In terms of distributional effects will he advise the Prime Minister that recent analysis by Westpac on the effect of Labour’s policy of 15 percent tax on capital gains for investment property shows it would take significant pressure off house prices?Mr SPEAKER: In so far as the Minister has responsibility the Hon Bill English.Hon BILL ENGLISH: As the member may be aware there is already a capital gains tax on anyone who trades property. I have not seen Westpac’s analysis that indicates that that has had the impact of a 15 percent reduction in prices. In Australia they have a capital gains tax on all commercial and investment property and they have house prices rising almost as fast as if not faster than they are in New Zealand.Tim Macindoe: How is the National-led Government’s 2010 tax package which reduced taxes on income and savings and increased GST helping families on low and middle incomes to get ahead?Hon BILL ENGLISH: Low and middle income families are still enjoying the benefits of the reduction in tax rates that were brought in then. The tax changes meant that someone on the average annual wage which was around $50000 in 2010 wasimmediately $15 a week better off and they still are. A family with two children on the average household income of $76000 was $25 a week better off. The tax system has become more progressive since 2010. Households earning less than $60000 a year are generally expected to pay less in percentage terms towards net tax in 2013-14 than they were paying 5 years ago. The income tax changes combined with the growth of the economy mean that higher-income New Zealanders are paying a greater share of the income tax burden.