Robertson GrantPart 2 Amendments to other enactmentsGRANT ROBERTSON (Labour—Wellington Central): Part 2 deals with the Tax Administration Act in large part and in particular I want to focus on the repeals within Part 2 for the Tax Administration Act of—and this is going to really excite people who are out there listening—section 24B(3)(ab). I am sure all members of the Committee will be intimately familiar with section 24B(3)(ab)—Chris Bishop: Not as closely as you.GRANT ROBERTSON: —of the Tax Administration Act. Chris Bishop the chair of the Finance and Expenditure Committee actually goes to bed at night and reads the Tax Administration Act such is his dedication to this task. But for the benefit of the Committee what section 24B(3)(ab) of the Tax Administration Act does is—and you are going to love this as well Mr Chair—it sets in motion section LC 13 of the Income Tax Act.The reason I mention that at the start is to indicate what the subject matter is of what appears to be a very dry thing. What that is is the tax credit for independent earners which has been the subject of significant debate in Part 1. Here in Part 2 what is happening is that that is being operationalised. So effectively Part 1 has made a policy decision to get rid of the independent earner tax credit and Part 2 is operationalising that. It is worth reading what is being amended via repealing section 24B(3)(ab) because it actually describes the kind of person who was getting the independent earner tax credit—the kind of person to whom the National members today are saying: You don't deserve that any more. You no longer deserve that support for the costs associated with going to work."So let us just talk about who that person is under this section of the Income Tax Act. That person in a tax year is not receiving an income-tested benefit is not receiving a veterans pension is not receiving New Zealand superannuation and is not entitled to a Working for Families tax credit—essentially a single person. And that is made absolutely clear by paragraphs (e) and (f) of section LC 13(1) because you cannot be a spouse civil union partner or de facto partner of a person who is entitled to a Working for Families tax credit and you cannot be receiving an amount of money outside of New Zealand and various other rules there.So we just want to be absolutely clear. What is happening here in Part 2 is we are saying to a group of people—single New Zealanders largely who are not in receipt of benefits who are not getting Working for Families—that this is a benefit that you got because there are costs associated with going to work that have increased for a single person. I know from talking to people around New Zealand that this was a real bugbear for them. They felt that in respect of all those Working for Families changes while they recognised that having children is expensive—which it obviously is—not all of those costs disappear when you do not have children; for example the costs associated with transport to and from work. It is one of the really interesting things in our society that there are huge costs associated with just getting yourself to your working day and for people who are affected by the changes that we are seeing here they are losing out significantly as a result of this change.The second part of section LC 13 affected by the paragraph that is now being repealed under Part 2 here deals with the amount of money. This is something that has come up previously in Part 1 and actually helps explain in many ways the concern on this side of the Chamber about the removal of this. The "Person's credit" as defined in section LC 13(4) of the Income Tax Act is "if the person's net income for the tax year is equal to or more than $24000". So that is the point at which it kicks in and it is $520 a year.One of the reasons the Government has given for repealing this is because not a lot of people take it up on a week-by-week basis and that means they do not really need it. I mean that is essentially what the Government has been saying here—that there is quite a low uptake of people taking it up on a week-by-week basis and most of them take it up only as an annual amount. Well that is not surprising. The amount of $520 in one lot—good useful; having to go through the process of applying for it on a week-by-week basis at $10 a week is not something that is going to excite people. But at $520 as specified in section LC 13(4) referenced by section 24B(3)(ab) as is being repealed in Part 2 actually it does account for a lot.There is in section LC 13(5) of the Income Tax Act full-year abatement and that is essentially at the point at which someone's income reaches $44000 for the tax year 13 cents for each complete dollar of the excess gets abated. Then in section LC 13(6) is the credit period months and that is the number of whole months in the credit period. In other words it is an annual payment. I do think there is a fair bit of disingenuous writing that has gone on in the regulatory impact statement around this independent earner tax credit because actually justifying withdrawing a tax credit on the grounds that people take it up on an annual basis rather than week by week is pretty weak justification. That does not mean that people do not want it. It does not mean that people do not need it in terms of how they get by on a regular basis. It just means that the tax system and interacting with IRD via the Tax Administration Act which is being amended here is actually quite complex and quite difficult. Nobody really wants to be on the phone with the IRD any more often than they have to be and this process that is here actually allows people to take it up on an annualised basis.So I think unfortunately from the Labour Party's point of view we are not going to be able to support these amendments in Part 2 either because they actually operationalise the very things that have concerned us in Part 1—in particular in this case the removal of the independent earner tax credit which leaves those people as a result of the other changes covered in this part $1 a week better off. That cannot be the benefit for those people of the massive surpluses that this Government has.In the time remaining to me in this call I just want to refer to the other amendments under clause 20 in Part 2 and they are the ones that make these threshold changes. So they make the threshold change for the bottom tax threshold to go from $14000 to $22000 and then they make the other one the second threshold go from $48000 to $52000. They are the two main changes under clause 20(3) and (4) of Part 2. Let us be absolutely clear: the net effect of passing these changes to the Tax Administration Act is that if you earn less than $14000 a year you get nothing from this tax package. The Minister in the chair Paul Goldsmith frowns and makes some kind of movement with his face. He can stand up and tell me if I am wrong about that that under the tax changes—the very thing that we are debating here; this is the Tax Administration Act—if you get $14000 a year or you earn less than that you are no better off no better off. Do you know there are 800000 New Zealanders in that group—800000 New Zealanders are getting absolutely no benefit—Hon Jo Goodhew: What's their average age I wonder?GRANT ROBERTSON: Well I wonder too and perhaps Jo Goodhew would like to take a call and get up and tell us why it is that no one under $14000 gets anything because this is a Government that has told us: "This is all about low-income New Zealanders. We want to give low-income New Zealanders a fair go." Nonsense. This is a $1.9 billion package that gives nothing to someone who earns under $14000 and gives all of us 20 bucks a week—all of us 20 bucks a week. How is that fair? That is not fair. So these threshold changes that are being made now under Part 2 here are actually creating an unfair tax system and that is why the Labour Party cannot support these.If this was really a package about supporting working families then we would be targeting the best way we know to do that which is through the Working for Families system. So the amendments here in Part 2—clause 20 and clause 21 which move the thresholds around—operationalise an unfair irresponsible set of tax cuts. This Government has squandered a great opportunity that it had. It has squandered the opportunity of actually delivering to New Zealanders strong social services and an income boost for working families.Part 2 of this bill unfortunately is just as bad as Part 1 because Part 2 is the part of this legislation that sets in stone a tax system that is now going to be less fair than it was yesterday. There are other improvements we would be making if we were putting forward legislation around this today changing the balance within the tax system but right now today we have a piece of legislation in front of us that actually makes for a more unfair tax system and an irresponsible tax cut when there is so much more that needs to be done to improve the social services of New Zealand. The Labour Party will not be supporting Part 2 of this bill."