Wong Pansy: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — First Reading 
Wong Pansy: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — First Reading 
[Volume:616;Page:12494] 
PANSY WONG (National) 
: 
 I think that the public and all members on this side of the House would quite like the Minister to take another call to explain why confirming an income tax rate of 39 percent for hard-working New Zealanders who earn only $60000 and above would motivate them to earn more and would stimulate growth. I think that this legislation to reaffirm the company tax rate of 33 percent and the high personal income tax rate is the Labour Government’s cruel Easter gift to hard-working New Zealanders. 
For the 8 months to the end of February 2004 the Crown’s operating surplus was $1 billion more than forecast. Part of that was due to the tax collected being higher than forecast by $154 million. Even the cash flow for core operating and investing activity was $781 million higher than forecast. The Minister had the nerve to bring in this legislation to reaffirm the Labour Government’s policy to impose high tax on hard-working individuals. 
Anyone who is earning above $60000 is classified as wealthy and is penalised by having to pay the higher marginal tax rate of 39c. Currently one in five hard-working New Zealanders are affected by that tax rate. National will not support this legislation that reaffirms the high tax policy to penalise the wealth creators in our country. We will not support this envy tax that will punish individuals who want to earn more in order to support their family better and that will create further wealth. 
I shall demonstrate further the total lack of rationale and consistency of this Labour Government. One has only to look at the Business Law Reform Bill passed by this House last night. That bill’s definition of a “wealthy person” apparently refers to one who has an annual income of at least $200000. Yet the socialist Labour Government is driven by envy to punish individuals who earn more than $60000. Those individuals are not even wealthy by the definition included by the Government in the Business Law Reform Bill. 
Of course New Zealanders are being overtaxed. As I mentioned previously the Crown financial statement identified that the tax revenue was $154 million ahead of forecast up to February this year. Since the Labour Government came into power it has introduced 17 new taxes in addition to new personal tax rates. There is a raft of new taxes ranging from fringe benefit tax trust income tax resident withholding tax tobacco tax and sherry tax and increased rates of taxation on petrol and alcoholic beverages. 
However I have to come clean and say that the Labour Government does cut taxes—but only for Maori authorities. That is one tax that was reduced but I had hoped that this Labour Government would apply one law for all and propose to reduce tax for all our hard-working New Zealanders. 
When we look at the legislation which reaffirms the income tax rate for individuals trusts and companies we want to ask not only why New Zealanders are overtaxed but where that tax money has gone. In recent weeks we learnt that $1.3 million went on consultation over a prison site an overseas trip to study hip-hop music and community educational courses for singalongs in people's own homes next to their own radios. A sum of $2 million was spent on the export credit office which has not signed a single export insurance scheme. Not only have hard-working New Zealanders paid too much tax but those taxes have gone to waste. 
Recently we learnt that gallstone sufferers were told that unless they had three attacks and blackouts it would be unlikely they would receive health treatments. So New Zealanders are overtaxed taxes are wasted and when it comes to essential health services people are not even receiving those. 
The Minister of Finance should explain to the public why he is claiming credit for the last few years’ good economic growth when it had been due to the previously lower exchange rate favourable international commodity prices and National’s strategies for immigration and international students. Recently when the Hon Michael Cullen learnt about the loss of business confidence and now that a lower economic growth rate is foreshadowed he simply said he always knew that the good times would not last. I think it is more a case of this Labour Government never tackling a hard chore when the sun is shining. High taxes and more red tape will drive a wedge between employers and employees thus pandering to union representatives. I think that cutting tax for both individuals and companies would be a good start to making up for lost time. 
The Minister of Finance’s spin on this bill is to focus on two other issues instead of on higher tax rates. First he championed a tax exemption for certain proceeds from venture capital investors’ sale of investments and that is a sensible move. However this Labour Government’s indifference to and lack of understanding and respect for the risk-taking attitude of entrepreneurs is in itself a barrier to the growth of our venture companies. 
The report of Ernst and Young in commenting on the monitoring of the venture capital industry sector in New Zealand said that venture capital in New Zealand is coming of age. Ernst and Young reckons that based on global trends biotechnology and information technology will continue to receive significant funding in the year ahead anyway. The company went on to say that in its opinion the type of environment in which the venture capital sector will grow is one where a dynamic business environment and culture thrive. 
I cannot say that the policies of the Labour Government are providing a dynamic environment in which venture capital can grow. For example the recent collapse of Project Aqua is sending the message to both domestic and international business communities that business in New Zealand suffers from uncertainty about long-term power supply and from a lack of urgency in tackling infrastructure issues such as roading and transport in Auckland Wellington and Tauranga to name a few. 
The other issue the Labour Government is championing in this bill is a tax rebate for people who move into business. Let me remind the public that the benefit of that move will need to be demonstrated. The rebate is available only if those businesses that do not have to pay provisional tax choose to pay; hence it is more to do with the time-use of money than with a rebate per se. 
The Minister just mentioned the improvement in the dispute resolution process. Well I am sure that all my colleagues in this House have heard complaints from taxpayers feeling a bit intimidated in dealing with tax disputes with the Inland Revenue Department. 
Rodney Hide 
: Not very! 
PANSY WONG 
: My honourable colleague obviously has prior experience. The finance Minister would have us believe that these provisions will resolve that problem. But let me just pose questions about two scenarios for the Minister to answer. Firstly why does the Inland Revenue Department have the ability to reopen an assessment for up to 4 income years yet taxpayers get just 4 months under those proposals? Secondly the legislation does not tackle the issue of a favourable case decision or ruling for the taxpayer yet the only taxpayer to benefit from that ruling is the one who takes part in that procedure.