Hide Rodney: Questions for Oral Answer — Questions to Ministers 
Hide Rodney: Questions for Oral Answer — Questions to Ministers 
[Volume:625;Page:20657] 
3.  
RODNEY HIDE (Leader—ACT) 
 to the  
Minister of Revenue 
: What dollar figure would the $60000 threshold have to be lifted to in order that no more than 5 percent of taxpayers pay the 39c rate in 2005-06 and what would be the fiscal cost of making this adjustment? 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 At around $80000 the fiscal cost would be $275 million a year. Taking into account claw-back from increased GST and other factors this would come to about $230 million a year. 
Rodney Hide 
: Does the Minister concede that that is a small amount considering the $8 billion - odd fiscal surplus that has been achieved for the first 9 months of this year; and would that not be a way of showing that for once this Government honours its promises and the pledges it has made to New Zealanders? 
Hon Dr MICHAEL CULLEN 
: I suggest that the member read recent speeches made by the Governor of the Reserve Bank. Clearly the governor is not arguing that the Government has been operating too tight a fiscal policy over recent times. Therefore there has not been the room for the kind of fiscal expansion that he and Dr Brash now both believe in with massive tax cuts plus massive expenditure increases from Dr Brash. 
John Key 
: Does the Minister think that wasteful Government spending such as hip-hop tours singalong songs and a bloated State sector ranks as a higher priority than letting hard-working Kiwis keep more of what they earn through threshold adjustments for inflation; if so why is he allowing that to happen under his watch? 
Hon Dr MICHAEL CULLEN 
: The thresholds have not been adjusted since 1988. Certainly they were not under 9 years of a National Government. 
Rod Donald 
: At what level could a tax-free threshold be introduced at a fiscal cost of $230 million and what benefit would that have for low to middle income earners compared with lifting the $60000 threshold? 
Hon Dr MICHAEL CULLEN 
: That is asking a lot off the top of my head but I think that an approximately $500 tax-free threshold—around that kind of level—would be appropriate which would translate for the lowest-income earners into $75 a year and for the highest-income earners into about $200 a year. 
Hon Peter Dunne 
: Has the Minister seen reports and arguments that many families around the $38000 income bracket as a result of bracket creep are now creeping into the second tax phase which might well be offsetting any gains they achieve from the Working for Families package and if he has seen such reports can he indicate what action the Government might be contemplating in respect of them? 
Hon Dr MICHAEL CULLEN 
: I do not think that those who crept over that margin would lose much of a proportion of their family support increases that are coming through which are of course very substantial. I am stopped in streets supermarkets and other places and thanked by people for those particular policies. But it is true that because incomes have grown substantially under this Government despite what Dr Brash says people have moved over thresholds. 
Peter Brown 
: Does the Minister accept that a tax system in general should be fair reasonable and encouraging and does he believe that our system reflects those qualities; if not what will he do about it? 
Hon Dr MICHAEL CULLEN 
: I suspect that everybody believes that the tax system should be fair reasonable and encouraging. The fact is that we do not agree on what that means. By that the National Party means that taxes should be slashed for those at the top end. We tend to favour increases in income for low to middle income earners. 
Rodney Hide 
: Does he think it fair reasonable and encouraging that under his watch the average worker in New Zealand has seen his or her marginal rate of tax go from 21c to 33c because of fiscal drag and does he think it is important to lower that marginal tax rate for average workers? 
Hon Dr MICHAEL CULLEN 
: There are a range of marginal tax rates depending on what other assistance people are eligible for. Of course under the policy of the founder of the ACT party a very large number of workers would earn a 100 percent effective marginal tax rate. 
Dr Don Brash 
: I raise a point of order Madam Speaker. I understood the Minister of Revenue to say that there were no threshold adjustments under National during the 1990s; is that correct? I just want to clarify that because if it is what he said— 
Madam SPEAKER 
: It is not a point of order actually but does the Minister want to answer? 
Dr Don Brash 
: If the Minister said that can I invite him to reconsider his answer? 
Hon Dr MICHAEL CULLEN 
: I am prepared to reconsider. I think my memory does remind me that there was one but the reality is if the member cares to listen the bottom threshold—the one that affects low-income earners—was not raised after 1988 and never has been.