Willis Nicola; Rurawhe AdrianNICOLA WILLIS (National): I rise to speak on Part 1 clause 3 of the Taxation (Annual Rates for 2020-21 Feasibility Expenditure and Remedial Matters) Bill before us. As other speakers have mentioned this is really a pivotal and crucial part of the bill in that it determines what the thresholds and rates for taxation are for income tax. This is very significant because what we see in the bill as it's presented is a missed opportunity. What we know has happened in the past year since income tax thresholds and rates were last set is that there has been significant asset price inflation across our economy particularly in the housing area. What we've also seen is that there have been some income increases in wages and as other speakers have very well laid out what those income increases have meant for some taxpayers is that they have jumped from being in one bracket of taxation to being in a higher taxation bracket. So by their own efforts and the increase in the earnings that they're facing whether that's just through inflation or for another group of taxpayers through receiving promotions or other things that inflationary effect has meant that more people are having to pay more tax. So these rates here represent a missed opportunity because they could have been adjusted to allow for that inflationary impact on overall wage levels. The important thing to realise here is that while the tax rates aren't adjusting the Crown is continuing to collect more and more tax. The impact of this on taxpayers is not only that individuals are having to pay more tax but that they are also in an economy where accessing the things they want to with their after-tax incomes is becoming more difficult. That is where housing is a very good example. The other important thing of course about where these tax rates are set is that they relate to income tax. It is significant in this bill that we understand what is meant by income tax because the rates as set out in this bill when we were last debating it in this Chamber were thought of in the ordinary sense of the term—that is income earned and tax paid therefore. But what we know this will extend to is in fact the capital gain on property that is sold within a 10-year period. The capital gain on residential properties that are sold within a 10-year period will now also face these tax rates. While I'm concentrating on this specific part I do think it's important that those in the Chamber consider how wide the net of this particular part of the bill can now be cast because it affects not only the taxes that people pay for income but the taxes that they will pay for new capital gains.National believes that the tax burden on New Zealanders should be reduced. This is particularly the case during what have been tough economic times and we see a real missed opportunity here not to adjust these thresholds. What we see over time is that this gets worse and worse cumulatively so that in fact what we see when we don't have bracket adjustment—when we don't have these adjustments—is that over time the Crown is taking more of what people earn and we think that that is the wrong direction of travel. Where possible the Crown should be working as hard as New Zealanders are to get more impact out of every dollar to ensure that it is doing more with the tax dollars it gets this year than it got with the tax dollars it got last year. We know that that's what New Zealanders are doing. We know that New Zealanders with their income are always working to get value for that income and what we don't think is fair is that they get placed in a situation where tax rates take more and more of their income over time. We also note very carefully that cumulatively over time this means that more and more taxpayers are being put into higher tax brackets where the marginal tax they face for the incremental additional effort they do is increased. This of course also has a significant incentive impact because as people move up through the brackets and move up through the tax rates what that means for them is that they get to keep less of what they earn for every bit of work and effort that they do. We think that overall that has a severely negative impact in an economy where we are wanting to encourage people to innovate to be entrepreneurial and to be productive. CHAIRPERSON (Adrian Rurawhe): I'll just give some advice to Damien Smith: if you want the call you need to say Mr Chair"."