Robertson Grant: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeRobertson Grant: Taxation (Annual Rates for 2015-16 Research and Development and Remedial Matters) Bill — In Committee[Sitting date: 03 November 2015. Volume:709;Page:7668. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): I want to thank the Minister in the chair for taking a call and I am not supposed to refer back to the last part but it was useful to have those reassurances and I do think it would be good as we go through the remaining parts of this bill if we could have that continuing dialogue. I am not wholly convinced I have to say by the Minister’s answer but at least we got one.Part 2 of the bill is a relatively simple part but it is one I think that members of the public will be very interested in because this is the bit where we set the tax rates—the rate of tax that New Zealanders actually pay in a given year. These are the annual rates for the 2015-16 year. It was not a subject of massive debate when the Budget came before the House because the Government did not propose to make any significant changes to those tax rates but they are a matter of significant public interest for two reasons: one historical and one looking to the future and that is what I want to talk about in this call.The tax rates as prescribed in Part 2 of the bill are those imposed by section BB 1 of the Income Tax Act 2007 and they must be paid at the basic rates specified in the schedule of that Act. What those rates are which I am sure most New Zealanders know is that from $0 to $14000 your marginal tax rate would be 10.5 percent; from $14000 to $48000 it is 17.5 percent; from $48000 to $70000 is it 30 percent; and from $70000 upwards it is 33 percent.It is that point that I want to note because each year as the House comes to this particular clause or part in a bill it is the bit where we remember what happened in 2010. It is when we remember that a National Government faced with an economy coming out of the global financial crisis—still in it in terms of the effect on most businesses—made the remarkable decision that the best thing it could do with the resources of the Government was to give tax cuts that benefited the highest income earners. That was the best thing that the National Party could come up with: a set of tax cuts where 43 percent of the benefit of those tax cuts went to the top 10 percent of earners. That was the effect of those tax cuts. The effect of those tax cuts was to widen inequality in New Zealand.The Child Poverty Action Group has a wonderful graph and it actually shows that inequality started to reduce once Working for Families was brought in and it continued to reduce until we get to the point of these very tax cuts when it clicks back up again. So that was the effect of the tax changes enshrined now in what we are doing in Part 2 of this bill because Part 2 of this bill reaffirms that decision. It reaffirms the decision taken by this Government to say: “We think the wealthiest of New Zealanders need a break. We are not so concerned about those on low and middle incomes—they can make do for themselves—but if we give that tax break to the wealthiest New Zealanders it will trickle down.” It has never changed—the National Party’s view that that wealth will eventually trickle down. Well it has not happened—it has not happened.Then rather than come back to this House and in this piece of legislation as it could be doingin Part 2—and actually Part 2 would be much longer if it had—prescribe new rates for schedule 1 of the Income Tax Act but it does not because those rates are not changing because this Government is prepared to let inequality grow. If we look to the future as I said I would do we now have the prospect that we will have a longer Part 2 in the version of this bill that will come before the House in a couple of years’ time because the tax cut carrot is being dangled out again by Bill English the finance Minister only just a couple of weeks ago. He is dangling out tax cuts as the economy slows down. We hear this morning that unemployment has gone up to 6 percent; there are 11000 fewer people in work; there are 151000 New Zealanders unemployed.And what could the Government do? It could invest in the regions support research and development support diversification of the economy—but no it wants to dangle out tax cuts again no doubt again weighted to the wealthy. It wants to dangle out a change to the provision in the Income Tax Act that Part 2 of this bill amends because that is its real goal: to reduce that heavy heavy burden on the top income earners in the vain hope that somehow that will trickle down to hard-working ordinary New Zealanders who go to work each week and pay the taxes in the middle bands that are here in Part 2 of this bill and who do not feel themselves getting ahead. They have not been given a break by this Government. This Government does not care about them; it only cares about those people at the high end. Part 2 of this bill entrenches that.