Woodhouse MichaelHon MICHAEL WOODHOUSE (National): Well thank you Madam Speaker. It was nice to see the Minister of Revenue finish where he perhaps could have started. It's not often people say these words but all I can say about this bill is thank goodness for tax accountants and for the benefit of Barbara Edmonds' tax lawyers because there's about a hundred pages in this bill and it is a notoriously complex piece of policy work. I know that my colleagues who are on the Finance and Expenditure Committee will do an excellent job in analysing this bill and scrutinising it and I'm sure they will come back to this House in due course recommending sensible improvements. But the real heroes of that work will be the advisers the Inland Revenue policy staff and our tax accountants and lawyers.Hon David Parker: And the committee members who sit through it!Hon MICHAEL WOODHOUSE: That's right. I must say I was quite staggered at the fact that the Minister of Revenue spent nearly 10 minutes talking about this but did not mention the policy elephant in the room which this bill is giving effect to. He talked about the health of our economy and how this bill will support it and maintaining the tax base but what he didn't say was what the Government is doing with this bill and that is increasing the top rate of tax for those who earn over $180000. So we're taxing the rich.My friends on the left will say Well isn't that a good thing?" Well I think it's worth pointing out once again as we have done in this House many times where the income tax burden actually falls: on earners. The latest information that Treasury has on its website suggests that the bottom 48 percent of income earners in this country pay—that's 48 percent—just 8 percent of income tax.Hon David Parker: What about GST?Hon MICHAEL WOODHOUSE: Oh I'll come to GST and wealth transfers in a minute Mr Parker; I appreciate your enthusiasm for the subject and I do appreciate there is an intellectual and philosophical difference about the merits of the amount of tax that's taken out of taxpayers' pockets. So 48 percent of income tax earners pay 8 percent of income tax and the top 12 percent of income tax earners pay nearly 50 percent of the income tax base. I think that's fair. I'm not saying that's wrong. Those data actually exclude the sort of wealth transfers that we have through things like Working for Families and independent earner tax credits. And it is true that depending on how one measures the GST whether it's a flat tax a regressive tax or a progressive tax—we can argue that till doomsday—the higher-income earners on a dollar for dollar basis will also pay more in GST. So I think that's fair. I don't think it is fair to continue to fleece upper-income earners out of envy. And what we have seen in these very straitened times particularly through COVID where the Government is spending an eye-watering amount of money priming the economy—that's the term that's used—is that stimulus usually involves two things. One is Government stimulating the economy through extra spending and the other way is to offer tax cuts. So we're not having a tax cut here. We're not even having a tax threshold change a question that was debated by this House only a month or so ago through Simon Bridges' member's bill to adjust tax threshold changes and in the debate I pointed out that a nurse on the average salary at Auckland Hospital is now paying nearly $2000 a year in tax not because they are earning more—they're paying more for that in any event—but nearly $2000 in tax because they are now in the top tax bracket. Ten years ago they were 10 percent below the top tax bracket. Now they're 10 percent above it because the tax bracket hasn't moved but their incomes have.So there's an enormous amount of money already being taken out of the pockets of hard-working taxpayers and this bill will take more. How much more? We don't know because the Minister didn't even mention that fiscal elephant in this bill. I think when it was first announced we were talking somewhere in the region of hundreds of millions of dollars. Well that makes that this change—what?—three or four days' worth of lockdown costs that the Crown is paying.What we know about tax is that it usually disincentivises things. It disincentivises things like I don't know—taxes on cigarettes and alcohol are there so people smoke and drink less. Well taxes on—we had a debate this afternoon on rebates for electric vehicles and taxes on internal combustion engine vehicles. Why? Because the Government wants people to buy fewer of them. We have taxes on—well they may call it something else but capital gains on houses. Why? Because the Government doesn't want well-off people to buy lots of houses; they want to equally distribute that through. So if we know that taxes disincentivise certain behaviours why are they then neutral on the fact that increasing income taxes disincentivises the earning of income? Because it does. Now the Government may well say "Oh well it's only 33 percent to 39 percent and it's only on income over $180000." but it will have a number of negative effects not the least of which is tax planning will come back into this country—tax planning that was eliminated by the previous Government the National Government that lined up the top rates of trust income and personal income tax effectively making redundant all of the trust arrangements that Mr Parker's legal colleagues in Dunedin were setting up under a previous Labour Government. They will come back when this is given effect to.What are the other things we haven't heard about in this bill? Well the Government has announced that they're going to remove interest deductibility on residential property rentals and that's going to come in in two weeks.Hon Gerry Brownlee: Less than that.Hon MICHAEL WOODHOUSE: In two weeks and we have seen nothing of the structure—yes that's right Mr Brownlee it'll be nine days that that becomes effective and we've seen nothing of those details. I don't know if the Minister is intending to introduce a Supplementary Order Paper on this bill in order to give effect to that but by the time we see it whether it's that or a new piece of legislation it will effectively be retrospective taxation and that is wrong. We're hearing about what the Minister described as the "removal of an exemption" some kind of loophole where councils are putting tax exempt strategies in place for council-owned companies. Well all that will do is increase the ratepayer burden because they need to get their income from somewhere and if their after-tax rate of return on the council-controlled organisations goes down they will have to increase the general rate in order to compensate. So this change is going to take more money out not only of the pockets of hard-working taxpayers but of hard-working ratepayers often the same people. Very little detail about the brightline test anomalies. We've got one fix in here but there's about 10 others that haven't been addressed.Look there are some good things in here. I think the cryptocurrency clarification on GST is a positive move albeit that I note—I think I heard the Minister say that there would still be tax on the profit of disposal of cryptoassets which is interesting. If it is a form of currency and a measure of value why would one then be taxing any perceived profit on that?I'll finish by commending one part of the changes to the donee status and that is for the Le Quesnoy trust a fantastic trust that is raising money for a museum in Le Quesnoy a place that is actually on the wall here one of the great battles New Zealand participated in in the Great War. I must say though I'm still not sure why donee status is an issue for primary legislation. I know the Legislation Design and Advisory Committee talked about that; in fact it may have done so at my request as Minister of Revenue because I didn't believe that those sorts of minor changes should be in primary legislation. They maintained that it should. But actually it's a good thing that the Le Quesnoy donee status is extended till 2025. But overall we cannot support this bill."