Cunliffe David: Questions for Oral Answer — Questions to Ministers 
Cunliffe David: Questions for Oral Answer — Questions to Ministers 
[Volume:674;Page:20172] 
5. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: Does he stand by his statement that “theoretically the right thing to do would be to have a comprehensive capital gains tax”? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yes I stand by the statement that tax theorists do support a comprehensive capital gains tax—that is on all capital gains including the family home. However the Government certainly does not support a complicated new tax that is part of a big-spending and increasing-debt package which is advocated by that member. 
Hon David Cunliffe 
: Is the Minister aware of the overwhelming importance of tax theorists in the 31 of 34 OECD countries that in fact have a capital gains tax and who of course reside in the OECD the IMF the New Zealand Treasury and the New Zealand Reserve Bank which have all recommended that one be adopted here? 
Hon BILL ENGLISH 
: The experts the member quotes all favour a comprehensive capital gains tax. I note the member does not because his would reduce the capital gains tax on property traders and provide a number of exemptions which will mean that not much revenue will be raised. The total effect of the package he has produced is that it would require borrowing of about $18 billion extra over the next 10 years. 
Hon David Cunliffe 
: If his criticism of Labour’s capital gains tax policy is that it is not comprehensive enough is he aware that of the 31 of the 34 OECD countries that have capital gains taxes only Japan includes the family home; therefore can he confirm that he would support a capital gains tax that did include the family home? 
Hon BILL ENGLISH 
: I can confirm that we do not support a big-tax big-spending package that would leave the country with a large legacy of extra debt. 
Hon David Cunliffe 
: If the Minister is alleging that Labour’s package is big-spending is he aware that it reduces net Crown debt to zero before the plans outlined in his own 2011 Budget; if so does he agree with himself that the tax system relies too heavily on those taxes most harmful to growth such as corporate and personal income taxes and that sectors with low effective tax rates notably property have expanded at the expense of the rest of the economy; if so will he now endorse Labour’s policy that reduces income tax by $1000 for every household and replaces it with a capital gains tax that closes the largest tax loophole? 
Hon BILL ENGLISH 
: In that case the member should have supported the Government’s Budget and tax package last year which this year is taking $1 billion of extra tax out of the property sector. But our main objection to the member’s package is it represents big tax big spending and big debt when this economy needs exactly the opposite if it is to grow. 
Hon David Cunliffe 
: Which is better for the economy: his Government’s plan to sell profitable publicly owned assets that bring in a bit of cash upfront but sees billions of dollars of dividends flow offshore forever or Labour’s fair tax plan that gives every Kiwi a tax cut on the first $5000 that they earn closes the capital income tax loophole and keeps Kiwi assets and dividends in Kiwi hands? 
Hon BILL ENGLISH 
: Our plan is much better because it incentivises work exporting savings and investment and it disincentivises excesses borrowing and consumption. His plan is worse because it means a big new tax big Government spending and a lot more debt for New Zealanders just at the time when debt is toxic. 
Amy Adams 
: What reports has he seen about how a capital gains tax might apply to KiwiSaver and other retirement savings? 
Hon BILL ENGLISH 
: Among the many dodgy assumptions and rubbery numbers in a package announced recently I have seen a report from the New Zealand Shareholders Association that was very concerned at the impact of the capital gains tax proposed on 1.6 million KiwiSaver accounts. The association asked whether the proposed tax would apply to KiwiSaver. Labour’s finance spokesperson said that the 15 percent capital gains tax would apply to those savings. The Shareholders Association noted that the compounding effect of this new tax on KiwiSaver savings would be very negative for the balances in New Zealanders’ KiwiSaver accounts. 
Hon John Boscawen 
: If big spending big tax and big debt are harmful to the economy why is his Government running a deficit this year of $16.8 billion? 
Hon BILL ENGLISH 
: That is a very good question. The main reason the deficit is so big is that we have allocated in the last financial year most of the Government cost of dealing with the Christchurch earthquake. But we share the member’s concern about the size of that deficit and that is why in the last Budget we put in a plan that will get us back to surplus by 2014-15 which I think will make us one of I think only three developed countries in the world that will have that degree of financial security. And it is why we will argue vigorously this year against other plans to significantly increase New Zealand’s debt at a time when that is a dangerous thing to do. 
Hon David Parker 
: Is the Minister aware of whether KiwiSaver accounts currently pay tax on their profits from share trading; if he is not aware of the answer to that why did he answer the question from Amy Adams in the way that he did? 
Hon BILL ENGLISH 
: It is not my package. The more important question is whether the Opposition spokespeople— 
Mr SPEAKER 
: Order! 
Hon BILL ENGLISH 
: —are aware— 
Mr SPEAKER 
: Order! 
Hon BILL ENGLISH 
: —of the impact of their own policies— 
Mr SPEAKER 
: What is wrong with the Minister’s ears? I was calling for order for quite some time before the Minister responded. Ministers know that when they start commenting on other parties’ policies they are at risk. The questions to the Minister invited that earlier on. The question of his own colleague went on to attack the Opposition’s policies which was starting to tread on thin ice. But the question from the Hon David Parker asked whether in the Minister’s answer to a previous question he had considered whether what I presume he was claiming to be capital gains in profits from KiwiSaver were taxed. I believe it was a serious question that deserved to be treated seriously but instead there was an attack on the questioner. I invite the Hon David Parker to repeat his question. 
Hon David Parker 
: Is the Minister aware of whether KiwiSaver accounts already pay tax on their profits from trading in shares; if he is not aware of whether that is true why did he answer the question from Amy Adams in the way that he did? 
Hon BILL ENGLISH 
: I am aware of the current rules and I am also aware that a recent package was proposed that would extend the application of a capital gains tax to all capital gains in KiwiSaver accounts which will make 1.6 million KiwiSavers worse off under Labour.