Dunne Peter: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
Dunne Peter: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
[Volume:672;Page:18931] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 The member who has just resumed his seat David Parker raised a number of points that I want to respond to. I am sure he will forgive me if I do not get them all in order. 
I will start with the last one first: the question about the change in the livestock regime that we foreshadowed in an announcement today. His analysis of the problem is correct. One of the reasons why we are going to have a look at this regime is precisely the situation he described to the House. I remind the House that what we are doing is the normal way of addressing these changes. We will issue an issues paper that will lead to some decisions being made. I imagine there will probably then be either a discussion paper or draft legislation to follow. The member should take it from me as a very clear indication that this area is not being looked at just for the sake of it. An issue needs to be addressed and we are keen to address it. 
That leads me back to the question about the material that was in the media yesterday relating to the amount of tax paid or not paid by dairy farmers. As I said at the time it was a shoddy piece of reporting. I think the member partially acknowledges that. It was a case of apples and pears. I will explain some of the reasons why. We have a self-assessment tax system. When people put in their tax returns they describe their occupation. A number of people describe themselves as dairy farmers. That led to the categorisation of those people and the amount of tax that was attributed to them. From memory it was around $26 million. 
But if the member had looked down the table he would have seen that there was another category—effectively “other”—that had $1.5 billion of tax assessed for it. A lot of the people in that category would be dairy farmers or other farmers who would simply describe themselves as farmers agricultural businesses or whatever. It becomes a classification issue. The issue was also raised about the distinction between taxing on turnover and taxing on income. I do not want to canvass that point any further because it has been well canvassed today. 
I will come back to the other questions that David Parker raised relating to the status in effect of Part 1 of the Taxation (Annual Rates and Budget Measures) Bill in relation to the changes made in Part 2. I see from the wry smile on his face that he knows the answer as well as I do. I am happy to confirm for the member that Part 1 of this bill confirms the rates of taxation that were put in place in the companion measure last year and that they are not being changed in this bill. 
I come to the other point that underpins both his contribution and the contribution of Mr Cunliffe earlier. I say to the Committee that it is now very clear that Labour and I suspect the Greens—although to be fair the Green Party members have not yet spoken in this debate—will go into the election with a policy of increasing taxes. It is only a matter of by how much. 
Michael Woodhouse 
: They won’t tell us. 
Hon PETER DUNNE 
: They will not tell us. 
Hon David Cunliffe 
: We are. 
Hon PETER DUNNE 
: I am grateful for that admission. 
Hon David Cunliffe 
: Read our lips. 
Hon PETER DUNNE 
: The member says we should read his lips. I place as much credibility on him as I placed on the original George Bush when he made that comment. Let us take the member at his word: Labour will increase at least the top tax rate. 
Hon David Cunliffe 
: We said that. 
Hon PETER DUNNE 
: He has confirmed it. Let me then work though the consequences of that increase which is where I come back to the points raised by Mr Parker. The biggest adverse tax change made in this country in the last decade was when Labour put up the top personal rate as its first act in Government in 1999. That triggered the explosion in the growth of loss attributing qualifying companies the explosion in the growth of family trusts for tax avoidance purposes and the explosion in a whole raft of people trying to define their income as something else in order to minimise it in respect of their tax obligations. All Labour is doing by signalling that it will go back to that policy is again setting off those massive distortions that we have spent the last few years trying to tidy up. The member may well say— 
Hon David Cunliffe 
: We haven’t announced that. 
Hon PETER DUNNE 
: That is exactly the point. It is the consequence of his actions. He knows it because he was part of a Government that started the process of trying to unwind the problem. 
The next issue that arises from that increase relates to differential rates. At the moment we have a top personal rate of 33 percent. The company rate is at 28 percent. There is an argument about whether a 5c gap is too great. In an ideal world it probably is but it is survivable in these circumstances because we aligned the trust rate with the top personal rate. If Labour wants to put up the top tax rate again—I think I heard Mr Cunliffe say this evening that Labour will not touch the company rate which will remain at 28 percent— 
Hon David Cunliffe 
: I didn’t say that. 
Hon PETER DUNNE 
: He did not say that. 
Hon David Cunliffe 
: No I said we’d be reluctant. 
Hon PETER DUNNE 
: This gets better the more we go on. The company rate would probably go up as well. The question we are then left to answer—and we may get an answer if I push Labour members—is what Labour’s attitude to the trust rate is. Unless the trust rate is aligned to the top personal rate then it will set off that whole process of avoidance that we spent the last decade trying to get over. 
So far we know from the debate this evening that an incoming Labour Government at some theoretical point in the future will put up the top tax rate. It will probably put up the company rate although by not quite so much. It is bound then to put up the trust rate and—[ 
Interruption 
] As the member interjects quite correctly because it will need to in order to get the support of the Greens it will have a capital gains tax a carbon tax a resource tax and all sorts of other things. 
I am grateful to Mr Parker for raising the question of what is in Part 1 of this bill. It confirms the annual tax rates as they were passed in last year’s Budget. We have no intention of changing those. I am delighted that we have now confirmed that just about everything is on the table to be increased if Labour gets into power.