Foss Craig: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — In Committee Third Reading 
Foss Craig: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — In Committee Third Reading 
[Volume:647;Page:16310] 
CRAIG FOSS (National—Tukituki) 
: 
 As I noted last night it is an absolute pleasure to be voting finally for a bill that brings in personal tax cuts. I thought we would have to wait another 6 months or so for that but I suppose that after 9-odd years it was always going to come sometime. Perhaps Part 2 could also be called the “Road to Damascus section” or the “Contradiction part of the bill” because it deals with changes to the Income Tax Act 2007—the tome sitting there on the Table. Part 2 changes the particular notional amounts etc. 
I note that this bill has had to cross a threshold first because in the last Budget and on numerous times after that the finance Minister has set himself four tests before he would even consider tax cuts. I will address those tests because that is very relevant to this part of the bill which is supposedly about how those changes will be funded. Those tests supposedly were firstly that tax cuts would not lead to greater inequality; secondly would not lead to inflationary pressures; thirdly would not require borrowing to fund them; and fourthly would not require cuts to public services. I will come back to the first test because there will be probably be plenty of time for that one next week. 
In relation to the fourth test though I make the point that Dr Cullen is playing silly word games again when he says that the tax cuts will not require cuts to public services. I think that in the Budget he used the word “reprioritisation” or something like that. In answer to questions leading up to the Budget in the House the other day he gave all sorts of bureaucratic nonsense and silly answers to what actually looks like his hidden agenda. 
I will address tests two and three because Part 2 relies on them. Test two was that tax cuts would not lead to inflationary pressures. Right there on page 70 of the Budget Economic and Fiscal Update from which this bill arises we see annual CPI forecasts for the next 4 or 5 years. A forecast of 2.7 percent was predicted at the half-yearly update—now it is 2.9 percent on average. Members should remember that it is virtually illegal for inflation to go north of 3 percent but the forecast for 2009-09 is for 3.2 percent inflation. The Minister has failed to test two— 
Hon Trevor Mallard 
: I raise a point of order Madam Chairperson. Although Part 1 was a relatively broad part of the bill Part 2 is about as narrow as we can get. There are some numerical changes there and some consequentials flow from them. The Committee stage is certainly not the place for a broad-ranging Budget debate. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Is the member replying to the point of order or does he want to continue? 
CRAIG FOSS 
: I will continue and will refer straight back to the part. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I just want to think about the point of order that has been called— 
CRAIG FOSS 
: Madam Chairperson I point out that Part 2 has tables that include changes—for example from $60000 to $70000—and it refers to section CS of the Act. When we look through pages 13 and onwards we can see changes to resident withholding tax etc. that all change the underlying rates. I am questioning this bill and how it will be funded—for example how changing the threshold from $60000 to $70000 will be funded. If it cannot be funded it is therefore inaccurate. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Yes you may continue. 
CRAIG FOSS 
: Thank you very much Madam Chairperson. The changes in Part 2 will show that as inflation gets further out of control the real impact of these changes to New Zealand taxpayers will be diminished. Of course over the last 8 or 9 years inflation has been driven up by the current profligately spending Minister. 
It is also quite relevant to Part 2 to question how these changes will be funded. How will the $70000 change to $75000 in clause 13(2) be funded because one of the Minister’s tests is that we will not borrow to fund cuts? Yet page 104 of the Budget Economic and Fiscal Update shows us there will be $6.4 billion of extra funding/borrowing to fund the current Budget. That will lead to a $12.8 billion cash deficit in year 4 I believe. If that is not borrowing I certainly do not know what is. There is also a very interesting table on page 102 of the update that Part 2 is very much linked to. 
Again it is a pleasure to be voting for this bill but I am just asking for more clarification more honesty and more transparency because the same Minister who delivered this Budget and this bill has for many many years argued the total opposite to what is contained in the bill. Even on the hustings at the last election many Labour members opposite constantly argued against the merits of tax cuts. The Minister himself gave a speech pretty much through gritted teeth and we could tell that Labour really did not want to endorse what was in the Budget. Part 2 will be talked about a lot during the campaign—a lot of numbers and what is good for a family of three a family with two kids etc. But I say “Give me truth give me transparency be upfront.” and if the Government is borrowing to fund these tax cuts then I would like to see that and see that very very quickly. Thank you.