Bridges SimonTAXATION (BUDGET MEASURES: FAMILY INCOMES PACKAGE) BILLFirst ReadingHon SIMON BRIDGES (Minister for Economic Development) on behalf of the Minister of Finance: I move That the Taxation (Budget Measures: Family Incomes Package) Bill be now read a first time. Today's Budget reveals a strong growing economy and a healthy set of Government accounts. It is important that New Zealand families directly share the benefits of that strong economic growth and that is increasingly the case. Median earnings have increased from $40000 to $48000 since 2010 and incomes across the distribution have increased. But because of that many more middle-income earners are faced with a marginal tax rate of 30 percent. We also have a number of lower-income people with young families who are struggling to get ahead. We have a system that is becoming too complex. As a result of Working for Families and other changes it can be very hard for people to work out what they are entitled to and how the work they do is linked to the income they receive.This Government's $2 billion per year Family Incomes Package announced today will provide better rewards for hard work start simplifying the tax and transfer system help lower-income families with young children to meet their living costs and improve incomes for people with high housing costs. This bill gives effect to the aspects of the Family Incomes Package that require amendments to primary legislation.First the bill increases the bottom two income tax thresholds from $14000 to $22000 and from $48000 to $52000. Second it discontinues the independent earner tax credit. Third it makes changes to Working for Families to increase family tax credit rates for children under 16 to align them with the rates for children aged 16 to 18 increase the abatement rate from 22.5 percent to 25 percent and decrease the abatement threshold from $36350 a year to $35000 per annum. The bill also makes other amendments required to give effect to the changes such as adjusting the thresholds for fringe benefit tax and resident withholding tax. The final part of the Family Incomes Package—the increases to the accommodation supplement and accommodation benefit—will be given effect by Order in Council in the near future. All substantive measures in the bill and in the package will apply from 1 April 2018.The income tax thresholds were last changed in 2010. Income growth since then has pulled more people into higher tax brackets. This bill reverses that trend by increasing the bottom two tax thresholds in turn increasing the rewards for work for low- and middle-income earners. This change provides a tax reduction of $10.77 a week to anyone earning more than $22000 a year increasing to $20.38 a week for anyone earning more than $52000 per year.This bill discontinues the independent earner tax credit to help simplify the tax system. It is claimed by only about one-third of eligible recipients during the tax year. Individuals who currently receive the credit will be fully compensated by the increase in the bottom tax threshold and will not have to file a tax return at year-end or select a different tax code to claim it. The Government wants to help low-income families with children to meet their living costs. This bill raises the family tax credit rates for children under 16 to align with those for children aged 16 to 18. The maximum family tax credit rate for the first child aged under 16 will increase by $9.25 a week while the rates for each subsequent child increase by either $17.75 or $26.81 per week depending on the age of the child. Aligning the rates for children of all ages also helps to make the payment rules easier to understand. At the same time this bill completes the Government's planned adjustments to the Working for Families abatement rate and threshold to ensure additional support is targeted at low-income families.These are the main points of this important bill for New Zealand families. The Family Incomes Package will benefit around 1.3 million working-age families by on average $26 per week. There will be flow-on gains to around 750000 superannuitants and 41000 students who also benefit from the Family Incomes Package. The package particularly focuses on assisting low-income families with young children and those experiencing high housing costs: 154000 families in the lowest quintile will benefit by an average of $35.32 a week or $1836.64 per year. The measures in this package are expected to lift 20000 households above the threshold for severe housing stress and reduce the number of children living in families receiving less than half the median income by around 50000.The package forms a comprehensive set of measures to improve the rewards for work to start to simplify the tax system and to lift family incomes. It is therefore with great pride that I commend this bill to the House.