Young Jonathan: Questions for Oral Answer — Questions to Ministers 
Young Jonathan: Questions for Oral Answer — Questions to Ministers 
[Volume:667;Page:14278] 
4. 
JONATHAN YOUNG (National—New Plymouth) 
 to the  
Minister of Revenue 
: How will the tax system be fairer and more equitable for all New Zealanders from 1 October? 
Hon PETER DUNNE (Minister of Revenue) 
: 
 In response to the member’s question the tax system will be fairer and more equitable in the following ways. By next Friday the bottom tax rate will have fallen 30 percent in the last 2 years to 10.5c and the threshold up to which it applies will have gone up considerably from $9500 to $14000. All intermediate tax rates will have been reduced and every income tax threshold increased so much so that for nearly three-quarters of taxpayers the top marginal rate will now be just 17.5 percent. When the effect of Working For Families tax credits is added in a family with two children will now pay effectively no tax at all until their earnings exceed $50000. 
Jonathan Young 
: Which groups gained most from the Budget 2010 tax changes? 
Hon PETER DUNNE 
: That is a very interesting question. Two-thirds of the cost of the income tax cuts will go to reducing the bottom two marginal tax rates. The rate for income up to $14000 will go down from 12.5 percent to 10.5 percent and the rate for income up to $48000 will reduce from 21 percent to 17.5 percent. In every single income level the income tax cuts will more than offset the rate of increase in GST. A further important point is that we are also reducing the top personal tax rate to 33 percent and aligning that with the rate payable by trusts. 
Jonathan Young 
: Which groups will bear most of the cost of the Budget 2010 tax changes? 
Hon PETER DUNNE 
: The costs of these cuts do have to be met and the Budget is therefore not a lolly scramble. The groups that will pay more are property owners large foreign companies with interests in New Zealand people who use trusts to reduce their taxable income to gain access to Working for Families tax credits and also smokers. For its own part the Government will be giving another $120 million to the Inland Revenue Department to better prosecute cases and we expect about a fivefold return over the next 4 years. In response to both this question and the previous questions all these measures put together are overall a much fairer tax system for every single New Zealander. 
Stuart Nash 
: How can the tax cuts be fair when they increase the wage gap between someone on the median wage and someone on $120000 by over $75 a week? 
Hon PETER DUNNE 
: I do not think the member was listening to my earlier answer. The biggest point of fairness in this package is the fact that nearly three-quarters of New Zealand taxpayers after 1 October will face a top marginal tax rate of just 17.5c in the dollar. That is a huge improvement on the position just a couple of years ago when that rate was over 30c in the dollar and it certainly boosts our international competitiveness. 
Stuart Nash 
: How can it be equitable when the Minister himself will be better off by almost $140 a week while someone on the median wage in his electorate will be better off by less than $5 a week? 
Hon PETER DUNNE 
: Unlike the member I am not fixated by what I earn. The reality is that with two-thirds of the cost of this package being borne by the bottom two tax-rate changes the vast majority of the impact of the package will be beneficial for people on those lower income tax rates. 
Hon Heather Roy 
: Will the final tax proposal outlined in his  
Making tax easier 
 discussion document prevent workers who have been overtaxed through no fault of their own from receiving a tax refund; if so how is this fair or equitable? 
Hon PETER DUNNE 
: Firstly we are still consulting on that particular proposal but the point at issue there is that by having a better method of collecting tax from people through greater reliance on electronic measures we will actually get the tax rate right first up so there will not be the need for the unders and overs square up at the end of the year. So I can assure the member that no one will lose out under that proposal.