Watts SimonThird ReadingHon SIMON WATTS (Minister of Revenue): I move That the Taxation (Budget Measures) Bill be now read a third time. I want to thank the members of this House for considering and debating this bill under urgency. The high cost of living is one of the most pressing issues here in New Zealand today and we know that Kiwis are doing it tough. That is why this coalition Government has delivered this important budget bill because it delivers responsible tax relief to hard-working New Zealanders who are trying to make ends meet in the face of ever-increasing inflation.The bill is being considered under urgency because delivering that tax relief is a matter of urgency. Kiwis need support now more than ever and we need to ensure that hard-working Kiwis are keeping more of what they earn. We are doing that by increasing the bottom three personal income tax thresholds which will allow people to make sure they keep more of what they currently earn before moving into higher income tax brackets. Many New Zealanders have been pushed into higher tax brackets due to inflation and wage growth meaning they have been paying and are paying more and a greater share of their income in tax. This is not fair. They earned that money and they should be able to keep more of it.A median income worker the average rate that they are paying has increased from around 15 percent in 2011 to around 21 percent today. Tax rates that go up as income rises lower the real value of wage increases that people receive. This results in lower incentives to work save and invest over time. Without increasing the tax thresholds periodically bracket creep occurs and financial incentives to work decline. It has been nearly 14 years since tax reduction has been provided yet inflation has steamed ahead. This is not what we want for New Zealand and our hard-working Kiwis so we need to take action to address this as a matter of urgency.That is why we are debating these changes under urgency and that is why the personal income tax changes and threshold changes will have effect from 31 July 2024 because New Zealanders need that support now. Normally such changes would have effect from 1 April being the beginning of the income tax year. I know that bringing that change in part way through the year may cause inconvenience to some but Kiwis have been waiting 14 long years for this. Every day we delay people are slipping further and further back economically. So it is important for us to ensure that we deliver responsible tax relief for the squeezed middle sooner rather than later in waiting for the start of the next tax year.We are reducing the compliance costs and the administrative burden for this change by introducing some of those transitional measures outlined in the bill. The bill therefore proposes that the current tax thresholds will apply from 1 April to 30 July 2024 and the proposed thresholds will apply for the remainder of the tax year. To account for the two sets of thresholds being applicable in one tax year the Inland Revenue Department will need to use composite rates. These are an average of the current and proposed rates and will be applied across the entire year to determine a taxpayer's annual tax liability. This will be used for Inland Revenue's end-of-year square-up calculations which assess a taxpayer's income against the amount of tax paid over that income tax year. These changes are proposed to help reduce compliance costs associated with taxpayers in making the changes part way through the tax year. The inconvenience of making a change part way through the year is outweighed by the benefits they provide to people who are working hard to make ends meet.In making these changes to the personal income tax thresholds we are also making consequential changes to other tax types to take into account the changes being made to the income tax thresholds. This bill therefore proposes consequential changes to the resident withholding tax fringe benefit tax the employer superannuation contribution tax the retirement scheme contribution tax and the tax on portfolio investment entity income.The bill will also restore dignity and the incentive for personal endeavour. People should always be better off in work than on the benefit but for people on the lowest incomes that principle has been eroded. We are therefore proposing to extend the independent earner tax credit by lifting the upper income threshold from $48000 to $70000. This will help an additional 420000 by $20 a fortnight. Increases are also being proposed by this Government for the Working for Families tax credits. These are the in-work tax credits which will see 160000 families receive up to an extra $50 a fortnight and the minimum family tax credit which will see 3000 of those families receive an extra $54 a fortnight. Together the changes outlined in this bill will see people better off.Our tax relief package that we have outlined in this bill will increase the take-home income of 83 percent of New Zealanders aged over 15 and over 94 percent of households—1.9 million Kiwi households on average will be better off on average by $60 per fortnight. More than 3.5 million New Zealanders on average will be better off by $32 per fortnight. Family Boost will also help an estimated 100000 families with young children. Households with children on average will be better off by $78 per fortnight.This bill will make a real difference to the people of this country. It is a bill which makes well-judged use of taxpayer's dollars. It encourages competitive enterprise and rewards hard-working Kiwis for their achievement. That is what our economy and New Zealand needs. This is an excellent taxation bill. I would like to thank colleagues in Treasury and Inland Revenue officials for all their work in providing policy advice and for drafting this bill. As the Minister of Revenue it gives me great pleasure to commend this bill to the House.