Tremain Chris: Taxation (Annual Rates of Income Tax 2007-08) Bill Taxation (Business Taxation and Remedial Matters) Bill Taxation (KiwiSaver) Bill — Third Readings 
Tremain Chris: Taxation (Annual Rates of Income Tax 2007-08) Bill Taxation (Business Taxation and Remedial Matters) Bill Taxation (KiwiSaver) Bill — Third Readings 
[Volume:644;Page:13784] 
CHRIS TREMAIN (National—Napier) 
: 
 Well that was Mr Paul Swain the hard-working MP from Rimutaka who just gave an election platform speech for the next election. 
R Doug Woolerton 
: And very good it was too. 
CHRIS TREMAIN 
: There is one problem. 
R Doug Woolerton 
: What is that? 
CHRIS TREMAIN 
: Mr Swain will not be giving that speech because he is in fact retiring from Parliament at what I would suggest is a very good time in his career. He is retiring before the Labour Party is run out of office. So I say to Mr Swain “Well done!”; that was a good election platform speech but unfortunately the electorate will not be hearing that one when it comes to the next election. 
I want to get into the taxation debate but before I do that I must comment about the antics of Mr Winston Peters this afternoon. The leader of New Zealand First before waltzing into the Chamber quietly had a look at himself in the window to make sure he was looking just right for the occasion. He came in sat down next to Mr Woolerton and requested leave of the House to table a picture of himself—a picture of his giving a gift to Starship Children’s Health hospital. I am a short-term MP here but the arrogance of that is hard to justify and I cannot understand it. It begs the question whether young MPs like myself should be seeking leave to table pictures of ourselves giving donations to charities in say Napier because we do not feel like paying our Bellamy’s bill on a particular occasion. Quite frankly it was unbelievable. But we are not here to debate those antics; we are here to discuss the third readings of the taxation legislation. 
I want to get to the guts of why National is not supporting this legislation. Mr Swain stood over there and spoke at length about how he could not understand why we are against it. Various members across that side of the House have tried to say that our opposition to this legislation is all about protecting our rich mates. Well if they call nurses policemen and wharfies our rich mates then maybe they are right. If they call builders plumbers engineers and fitters and turners our rich mates then maybe they are right. If they call university staff plumbers and Wellington bureaucrats our rich mates then maybe they are right. We believe that hard-working Kiwis are being overtaxed and this legislation does nothing to resolve it—absolutely nothing. 
I want to talk to five specific points this afternoon to put our side of the argument as to why we are not supporting the legislation. The first point is the increasing tax burden and the second is the quantity—the mountain of tax that has been collected in the last 6 years. I want to touch on fiscal drag I want to look at our surpluses vis-à-vis Australia’s and lastly I want to finish on the chance of tax cuts under this Government. 
Once again we think Labour has overtaxed hard-working Kiwis and as a result we will not be supporting this legislation. In terms of the increasing tax burden when Labour came into office and introduced the 39 percent tax rate Dr Cullen said on 23 December 1999 that 95 percent of people will not be asked to pay more tax and that instead only the top 5 percent of income earners will pay more. According to Cullen’s answers to questions in the House just recently not 5 percent but 12.9 percent of taxpayers are now expected to pay the top income tax rate in the 2008 income year. They include those nurses those wharfies and those fitters and turners who are now in that top tax bracket and who that side of the House believes are rich. Treasury’s key facts paper released on Budget day actually goes further than 12 percent; it states that 14 percent of taxpayers are now paying that level of taxation. 
Remember also and more important that virtually everyone—not just those top taxpayers but virtually everyone—is paying more tax because of bracket creep. People on the 19.5 percent rate will have drifted to 33 percent simply because of CPI increases in their wages without any accompanying adjustment to the bracket levels. Bracket creep means that in real terms our tax rates increase subtly every year as we earn more income and move to higher tax brackets. As a result a person on the average wage now pays an extra $2400 in personal income tax a year than he or she did in 2000 despite being no better off in real terms. It is those people who have moved into higher tax brackets who that side of the House believes are in the rich category. 
Note too that our top tax rate kicks in at only 1.4 times the average wage. Although Australia has a higher top personal tax rate—National members acknowledge that—it kicks in at $180000 not $60000. That is what catches our nurses that is what catches our policemen and that is what catches our wharfies. Do members on this side of the House think that nurses teachers and wharfies are rich? No not one iota. We think Labour has overtaxed those hard-working Kiwis and as a result we do not support this legislation. 
Secondly in terms of the quantum of the tax burden let us have a look at how much tax has been collected over the last 6 years. In the year ended 30 June 2000 $34.4 billion was collected in tax in this country. In the year ended 30 June 2007 it had risen to $56.5 billion. That is a whopping $22.1 billion increase in taxation across the country over those 6 years—$5525 per man woman and child in this country in extra taxation—a whopping 64 percent increase in additional taxation. If that is not reason enough to be voting against this legislation then I do not know what is. National members think Labour has overtaxed hard-working Kiwis and as a result we are not supporting this legislation. 
The third point is fiscal drag which is the net effect of additional tax collected through people rising into higher tax brackets. Fiscal drag in New Zealand since 1 April 2000 is estimated as being in the order of $1 billion in extra income tax revenue. Since 2000 Australia has increased tax thresholds and reduced tax rates. Like I said before the top personal income tax threshold has increased in Australia over that period from $60000—where we are at now—to $180000. The lower personal tax rate which applies immediately after the tax-free threshold—yes the Australians have a tax-free threshold which they are aiming to pick up to $20000 over the next 6 years—has reduced from 17 to 15 percent. So above the tax-free threshold if one is a low-income earner the lower rate that one pays is 15 percent. These tax changes have largely offset the effects of fiscal drag in that country and that was a key reason behind average take-home pay increasing in Australia over recent years. Between 2000 and 2006 the gross average hourly wage in Australia increased by 34.3 percent and the average net income increased at a similar rate. 
But here in New Zealand between 2000 and 2006 the gross average hourly wage increased by only 22.1 percent. New Zealand net incomes have grown at a slower rate. That has to do with income taxation. That has to do with the personal tax rates that we charge people in the middle and lower income levels. Changes to those levels can have a massive impact on the take-home pay of hard-working Kiwis and that is why we are not voting for this bill. 
This situation has been exacerbated in no small way by the number of Kiwis moving to Australia. There were 75000 last year in total with net migration of some 40000. Dr Cullen wrote that off as a lifestyle choice. He said people were leaving because of a lifestyle choice. Then he went on to say that they are functionally innumerate and we do not need them anyway. Unbelievable! In closing I say that I think those people understand the numbers. I believe they are not functionally innumerate. They understand that the tax rates are lower there and that they earn a better wage there and that is why they are going.