Russell DeborahHon Dr DEBORAH RUSSELL (Labour): I do have one other set of questions around clause 39 that I would like to go to but to keep things straight I just want to go back to this issue that we're really pursuing right now. I am a little surprised to be honest that no modelling has been done. Now it would take a bit of time with a spreadsheet and a calculator to work out the difference in fringe benefit tax (FBT) and employer superannuation contribution tax (ESCT) that would be paid per employee given the changes in the thresholds. It could be done—and I note the bank of excellent officials there. It's a set of numbers and it could be calculated and it could have been calculated within IRD. I take the Minister in the chair Simon Watts' point about consultation but I notice that they did consult with payroll providers so some consultation's good and some consultation is bad? Let's have a little think about that.I am actually genuinely serious about this because what is happening is that employers will have to pay more tax in comparison to the personal income tax rates. This is extra tax—not in comparison to what is being paid now but in comparison to what will be paid from 31 July—being loaded on to employers. Now I take the point about the trade-off with the complexity of the compliance costs. That is a known phenomenon and the Minister and his officials are quite right to say that there are compliance costs there but why was the choice not offered? That's the thing and the Minister hasn't answered that question yet. I asked it previously and it hasn't been answered yet. In the FBT system as it stands at the moment there are two ways of calculating fringe benefit tax: one has higher compliance costs; the other one has higher actual FBT. So we already have the concept of a choice being over to employers sitting within the FBT system. Why did the Minister not allow employers to make that choice as to whether employers wanted to incur higher compliance costs or whether employers wanted to incur higher FBT tax rates in comparison to the personal income tax rates that are in force from 31 July until next year?That is the last question I'll ask on this topic. I do have another set of questions but I'd like to hear from the Minister on that and then I'll go back to the one further set of questions that I would like to ask on this part. [Time expired]CHAIRPERSON (Barbara Kuriger): Perhaps if the Hon Dr Deborah Russell could ask that one more set of questions that you just referred to.Hon Dr DEBORAH RUSSELL: Oh I'll ask the second—right. May I have a five-minute call on this? It'll take a little bit of extra.CHAIRPERSON (Barbara Kuriger): It is a five-minute call—as long as it's based on questions.Hon Dr DEBORAH RUSSELL: It is. The same thing is applying now in clause 39 of the bill and this is the new portfolio investment entity (PIE) rate the prescribed rates for PIE investments and retirement scheme contributions. This one's even more interesting because what is happening as far as I can tell and the Minister will be able to confirm this with a nod; you might want to wait Minister—but the rate at which tax is paid in PIEs has a series of thresholds and for most of us on the higher rates we get a concessionary tax rate. So if you're on the 39 percent rate your PIE rate is nevertheless 28 percent; if you have a 33 percent rate your PIE rate is 28 percent; 30 percent rate your PIE rate is 28 percent; if your income tax rate is 17.5 percent your PIE rate is 17.5 percent; and if your income tax rate is 10.5 percent your PIE rate is 10.5 percent. So there's concessions at the higher end.Now as far as I can tell the PIE rate thresholds are not changing until 1 April next year either. That's correct? OK I've got that correct. What that means is that low-income people who nevertheless are putting savings aside as they would do through KiwiSaver and the like—you know making contributions to KiwiSaver—are getting taxed at the same rate from 31 July this year until 31 March next year at the rate that applies right now. So those low-income people sitting in PIEs are not going to get the benefit of the lower rates until 1 April next year. I just wondered if the Minister could confirm that that's correct. I'm trying to read this and get my head around it. So as far as I can tell those PIE thresholds are not changing till then. It means that low-income investors in KiwiSaver are going to keep on paying the same rates as they are now. Now sure it's in comparison to the same rates as they are now but they are not going to get the benefit of the changes to the income tax thresholds until 1 April next year. So it's not just employers who are having to pay more FBT and more ESCT in comparison to the personal income tax rates; now we have low-income investors.I think that's what it's saying. I would really appreciate it if the Minister would confirm that that is exactly what is going on. It's even more important given that those of us who are on higher incomes and are on the higher tax rates—on the 39 33 and 30 percent marginal tax rates—Carl Bates: Is this a question or a political statement?Hon Dr DEBORAH RUSSELL: Oh please take a call Mr Bates. If you're interested in this please take a call. So if I could just get that confirmation from the Minister that that's what's going on because it does make a difference. Thank you Minister.