Key John: Questions for Oral Answer — Questions to Ministers 
Key John: Questions for Oral Answer — Questions to Ministers 
[Volume:635;Page:6209] 
7.  
JOHN KEY (National—Helensville) 
 to the  
Minister of Finance 
: Does he stand by his statement that the Business Tax Review is a critical part of the economic transformation agenda? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Yes. 
John Key 
: Can the Minister confirm reports from the Labour Party conference that both he and Trevor Mallard told delegates that a cut in the company tax rate would in fact have little impact on efforts to transform the economy; if so is his Government’s official position that a cut in the company tax rate is sub-optimal when compared with other changes he could make in the area of company taxation as it relates to economic transformation? 
Hon Dr MICHAEL CULLEN 
: No I cannot. On the second point there is no question that many in the tax community and indeed in a range of business sectors believe that changes to the international tax regime in respect of business is more important than the headline rate. 
John Key 
: If he cannot confirm that why did he go to the Labour Party conference with Trevor Mallard and tell his delegates there that he was opposed to a cut in the company tax rate then give a speech on the Monday saying the opposite? 
Hon Dr MICHAEL CULLEN 
: I went to the Labour Party conference not with Trevor Mallard but with my wife. 
John Key 
: I raise a point of order Madam Speaker. Do you really think an answer to the question is that he went to the conference with his wife as opposed to an answer relating to company tax—[ 
Interruption 
] I know that it is very embarrassing for Mr Cullen that he did that but— 
Madam SPEAKER 
: No the member is pushing his luck. The member should be careful with asking questions. You do put little flicks in your questions. However I will ask the Minister to elaborate. 
Hon Dr MICHAEL CULLEN 
: I cannot confirm what the member said in any respect. 
John Key 
: When he says that he might cut the company tax rate and that that will have implications for the personal tax rate is that because he is concerned about establishing a gap between the mid-rate and the personal tax rate and the company rate and the top personal rate in which case does he mean that that will require him when he says there are personal implications to cut the rate or can he achieve this just through threshold changes? 
Hon Dr MICHAEL CULLEN 
: There is an awful lot of water to flow under a number of bridges before that particular question can be answered. Not the least is the matter that the member keeps ignoring which is the impact of any changes on the macroeconomic environment and I invite him to ask his leader what those are. 
John Key 
: If he is now worried about the personal implications by having a gap between the company tax rate and the personal tax rate—and I assume that is what he means when he says that there are personal tax implications of a cut in the business rate—why is he worried now and why was he not worried in 2000 when he decoupled the top personal rate and the company rate? 
Hon Dr MICHAEL CULLEN 
: In terms of that particular issue the member might care to look across the Tasman. The company tax rate is 30 percent and the top personal tax rate is 47 percent. 
John Key 
: Has the Minister gone back to read his own speeches and done a calculation similar to the calculation I have done in relation to the annual costs of his tax package which he seems to be indicating would be around $660 million to lower the company rate to 30 percent around $100 million to support the initiatives he is discussing on research and development exports and skills and around $700 million to $800 million to make even modest changes in income tax thresholds; in which case does he agree with me that the package that he discussed in his speech on Monday which he has been reiterating around the country has an annual cost of around $2 billion? 
Hon Dr MICHAEL CULLEN 
: I can make no such confirmation. As I said first of all we will not engage in changes that threaten the macroeconomic environment and unlike National we will not be cutting health and education to pay for tax cuts.