Shanks Katrina: General Debate 
Shanks Katrina: General Debate 
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KATRINA SHANKS (National) 
: 
 It is my pleasure to take a call in the general debate this afternoon. We are seeing probably the biggest tax reforms this country has had in the last two decades. This Government is sending out a clear message with these reforms and that clear message is quite simple: we will reward hard work. We will reward the people who go out there and work hard by reducing their personal tax rates. We will reward people if they go out and invest and if they go out and save because we want New Zealanders to think about what they are doing with their money and about how well they can do with it. 
New Zealand is renowned for being a country of spenders. We are very good at spending everything we have and we are very good at borrowing to spend money we do not have as well. Part of the reason why we are in a recession in New Zealand now is that people have borrowed to spend money on consumables. They have borrowed against their mortgages to spend money on increasing their personal assets like a car. Instead of saving to do that they have borrowed on their mortgage or they have run up credit on their credit cards. So this Government is sending some clear messages out there: let us work hard let us invest let us save and let us get ahead. If the reason that people are borrowing for investment properties is to get ahead through tax advantages then they will not be able to do that any more. If people want to go out and spend every single cent that they earn on consumables then they will be paying a portion of that spending on GST. We have made a whole range of reductions in personal tax and we have increased GST to 15 percent. We have not made GST 15 percent; we have increased it by 2.5 percent to 15 percent. In effect we have given a $4 billion tax cut to New Zealand and we have taken some money back by increasing GST to the value of $2 billion. New Zealanders overall will be $2 billion better off. 
Last night I went to a Wellington kindy association AGM held in Johnsonville in Ohariu. When one looked around at the parents the mums and dads at that AGM one could see that they work hard. They want to get ahead and they want these tax cuts. Those parents do not measure their success by measuring how well this Government does with regard to GDP; they measure their success by their real wages by their real salaries by how much they take home at the end of the day by how much they have to play with by how much they can spend on groceries and clothing and by how much they can spend on taking their kids on a holiday. That is how they measure their success right here right now. This Government is delivering a tax cut to those families on 1 October. 
It is interesting that we talk about what families in New Zealand want. They just want to be left alone to get on to get ahead in life and to do their thing without having the Government coming back and saying that if they reach this much when they are earning then it will take this benefit away from them for doing that. Those families want to work hard and earn money take it home and decide in their own home how they will spend that money. That is not too complex. 
In fact we see that these tax cuts are quite significant when we look at a couple of the income brackets. I will talk members through those because people talk about this in concept but not many people actually get the changes. If people earn up to $14000 a year their tax rate changes from 12.5 percent to 10.5 percent. If people earn between $14000 and $48000 a year their tax rate moves from 21 percent to 17.5 percent. That is quite a big drop. If people earn between $48000 and $70000—we are talking now about people like teachers police officers and nurses—their income tax rate drops from 33c to 30c in the dollar. If people are lucky enough to earn over $70000 their income tax rate drops from 38c to 33c in the dollar. What does that mean in terms of what people take home at the end of the day? If we include the increase in GST the average wage earner in New Zealand who earns about $50000 will be about $15 a week better off. The average family in New Zealand will be $25 a week better off. A retired couple receiving only New Zealand superannuation will be $11 a week better off.