Prebble Richard: Income Tax Bill — Second Reading 
Prebble Richard: Income Tax Bill — Second Reading 
[Volume:616;Page:11794] 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I rise on behalf of the ACT party to speak to the Income Tax Bill. As members have said it is going to be the largest bill ever passed by our Parliament. It is not just the 2307 pages in these two volumes but there is already a Supplementary Order Paper that contains another 114 pages. The ACT party will be voting against the bill. The reason we are doing that is that we are opposed to the principles contained in this bill. Having said that we do accept it is desirable that Parliament regularly rewrites tax laws into one law so that tax practitioners and perhaps members of the public will be able to find the tax law. That is principally why we are doing this and it has also been written in such a way as to try to make tax law more understandable. ACT supports that concept and therefore we have not opposed the procedural measures that have been necessary to enable such a bill to go through. 
Members will realise that if any one party had dug its toes in the Government would not have enough time to pass a bill of this nature and we have not procedurally prevented this bill from going through. But now that we are having the second reading and we are talking about the principles of the Income Tax Bill it is important that I set out the reasons why the ACT party does not support the legislation. The first one is that we would not need 2400 pages of tax law unless the Government was doing something quite extraordinary. What is it doing that is extraordinary? The Government is taking 40 percent of everything that is produced in New Zealand. Would the public of New Zealand voluntarily hand over 40 percent? No they would not. That is why the Government needs 2400 pages of draconian measures to take the money—because it is a draconian measure. Would the member mind doing her telephone conversation a little— 
Metiria Turei 
: Ha ha! 
Hon RICHARD PREBBLE 
: That is very funny. I raise a point of order Madam Speaker. We do have telephones in the House but the Green member who I would have thought would be opposed to telephones and would be doing things by tom-tom— 
Hon Brian Donnelly 
: Smoke signals. 
Hon RICHARD PREBBLE 
: —or by smoke signals should have her conversations in a somewhat less obvious fashion. 
Madam DEPUTY SPEAKER 
: Can we just show courtesy to members certainly when they are speaking and not be on the telephone? 
Hon RICHARD PREBBLE 
: I will say to the Green member in the House that we are not just taking 40 percent of gross domestic product (GDP). If we realise that a large number of the population are young and we have those who are on welfare and those who are retired it follows that working New Zealanders must be paying more than half their income to the Government. The ACT party says that is an outrage and it is not something we support so we do not support the tax laws that make that possible. 
Can I then tell the Government why it is wrong that the Government takes 40 percent of GDP? Firstly income tax is if one likes the penalty we all pay in order to work. If one wants to work in this country the penalty is that one has to pay tax. If one wants to invest the penalty is that one must pay tax. [ 
Interruption 
] The member might have incredulity. She might never have invested. If she tries investing the Government will penalise her for doing it. If the member was to try to be more productive she would find that the penalty for that is income tax. It follows that if members want more productivity if they want more wealth in New Zealand if they want more investment—and I understand that all parties say that they do—we should be lowering the amount of tax rather than passing laws of this sort to increase it. So that is another reason we are opposed to this bill. 
But there is a further reason why it is 2400 pages long: this tax bill is not just to collect the amount of money the Government needs. If that is what it was going to do we could probably do it with 1000 pages of law. 
John Carter 
: What? 
Hon RICHARD PREBBLE 
: No we would probably need 1000 pages of law. But successive Governments have used the tax system to redistribute income and that is the objective of all social engineers. This is a piece of social engineering and I say to the House that it is unfair but it will also continue to fail. That is another reason why the ACT party is opposed to it. One reason why we are saying to members that we do not think this sort of tax law is necessary is that we do not support the notion that just because one earns more money the Government has the right to confiscate it. I can think of a very good example of that given by the Leader of the Opposition before he was a member of Parliament. He pointed out that under the present tax law—this law we are passing here—a couple with two children who earn $100000 a year pay a hundred times more tax than a couple earning $25000 a year who qualify for family support. He also pointed out quite rightly that our tax laws are skewed in favour of those on low incomes. Indeed many people on low incomes are net receivers of money from the Inland Revenue Department via family support. 
John Carter 
: From us the people. 
Hon RICHARD PREBBLE 
: From us right. I am obliged to the member. They are net receivers of money from the people and I want to draw to the attention of the House that the vast bulk of income tax is paid by just a third of the electorate and that third of the electorate really pays very heavily. Then when I hear people say—not just the Government but now apparently the National Party—that $60000 a year means one is rich I just wonder what planet they are living on. Why is $60000 important? It is because that is where the top 39c tax bracket cuts in. 
 We are now being told by the two major parties that the top 39c tax bracket should continue. The ACT party does not agree with that. We say we should give a tax cut to every worker and there are a variety of reasons for that. One is that it is a question of fairness but secondly there is a thing called “keeping your pledge”. I have a copy of these cards. I know that the Government is trying to gather them up but this is the credit card promise that has that photograph of Helen Clark—apparently it is Helen Clark—stating that: “My commitment is to you we will deliver.” This was pledge No. 7: “No rise in income tax for the 95 percent of taxpayers earning under $60000 a year.” 
This year members know that 20 percent of all full-time workers are in the top tax bracket. That is unfair. Why should those workers wait as the two major parties compete for the social welfare vote? I say that we ought to give a tax cut to everyone. We could give a tax cut to every worker. We could give $100 per fortnight to every single worker in New Zealand and that would cost $4 billion. The taxpayer surplus is $6.9 billion. I agree that we ought to cut the company rate but cutting it just to the rate of Australia will not cut it. Why should someone come to New Zealand? We have to give a competitive advantage and with a $6.9 billion surplus we could go to a flat tax rate of 24c in the dollar. We would then need a tax code not of 2400 pages but of probably less than 20 pages. If we had a flat rate of tax whereby everybody pays the same amount on every dollar he or she earns the person on $100000 would be paying 4 times more than the person on $25000 but that is a fair system. It would be easy to implement and it would result in a huge increase in production jobs and wealth. All it needs is the two major parties to decide to adopt some sound economics and some fairness and then we could retire a whole lot of tax planners as well.