Copeland Gordon: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — In Committee 
Copeland Gordon: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — In Committee 
[Volume:622;Page:17369] 
GORDON COPELAND (United Future) 
: 
 I would like to speak to Supplementary Order Paper 284 in my name which inserts new clauses 185A and 229A in Part 5. As is well known to the Committee now my Supplementary Order Paper adjusts the tax brackets for the effects of inflation between 1 April 2000 and 1 April 2005. The current rates of income tax were introduced to Parliament on 1 April 2000. They were affirmed every subsequent year by Parliament including this year. Accordingly the first opportunity to change the rates will be 1 April 2005. It has been estimated that inflation between 1 April 2000 and 1 April 2005 will be about 13 percent. If the tax brackets are not adjusted for inflation taxes therefore are increasing in real—that is in purchasing power—terms. That fact was confirmed to the House by Dr Michael Cullen in answer to a question on 3 November 2004. He agreed that that was factually the case—that if we do not adjust the brackets for inflation then in real terms taxation increases. The present brackets were established at $9500 for the low-income rebate and then at $38000 and $60000. My amendment proposes that the figures be changed from $9500 to $10750 from $38000 to $43000 and from $60000 to $68000 just to ensure that New Zealanders pay the same real rate of taxation as they did on 1 April 2000. 
I brought this matter to the Committee in my Supplementary Order Paper now because this is the last opportunity we will have to adjust the basic rates of income tax prior to the 2005 election. The next opportunity will be 1 April 2006 the other side of that election. Dr Cullen has not indicated to the Committee at this stage any intention of adjusting the income brackets for the effects of inflation at any time. He has specifically said that he has no time horizon in view for that and that he has no movement in inflation in view before he would take such a step. I worry very much therefore—and current polls indicate that the Labour Government may well be returned in the 2005 elections—that we may wait another 5 years before we see any adjustment whatsoever to the basic rates of income tax in New Zealand. By that time I would sincerely hope that most New Zealanders would be earning $60000 or more at which point we would all be paying tax at the rate of 39c in the dollar. That is the logical outcome of doing nothing. Therefore I believe it is an unacceptable position for the Minister simply to say he will do nothing. Dr Cullen agrees that the situation is wrong and agrees that income tax is going up but says he has no idea when he will adjust the tax brackets—if at all; if ever. The people of New Zealand need to understand very clearly tonight that that is the position of the Minister of Finance and that he has indicated no other position in spite of various attempts in the House in question time by both myself and members of the National Party New Zealand First and ACT to get some indication from the Minister as to whether he will move on this matter. 
I think it is pertinent given those realities to remind the Committee of the commitment that Prime Minister Helen Clark made to the nation in 1999. I want to read from the so-called credit card. Item No 7 stated that the commitment was that there would be no rise in income tax for the 95 percent of taxpayers earning under $60000 a year. By the Minister’s own admission income taxes have in fact increased for people earning less than $60000 a year. Because he has not adjusted the brackets more people have shifted from paying 19.5c in the dollar to paying 33c in the dollar and of course a lot more people have moved from paying 33c in the dollar to paying 39c in the dollar. It is also true that more than 5 percent of people are now earning more than $60000 a year. I just do not think it goes down at all well with the people of New Zealand for the Labour-Progressive Government aided and abetted by the Greens to say that my proposal is just a tax cut for the wealthy. That simply does not cut any ice.