Webb DuncanDr DUNCAN WEBB (Labour—Christchurch Central): Kia ora e te Mana Whakawā. I'm really pleased to rise to speak to this excellent and progressive Taxation (Annual Rates for 2021-22 GST and Remedial Matters) Bill. Before I get much further I must say I find the suggestion from the Opposition that you have to earn over $180000 a year to be a hard-working New Zealander to be pretty repugnant. I know many many people out there who are earning far less than that and I will come to that soon.The importance of this bill is hard to overstate. Setting the rates of tax is something we should constantly be turning our minds to as Dr Russell mentioned earlier. It's a constitutional principle that we must come to this House annually to strike the rate of tax in New Zealand. New Zealand's taxation regime as confirmed by this bill is frequently referred to as a low-rate broad-based system. That is to say that by and large the tax rates are modest and I include the 39 percent rate in that for those earning over $180000. Australia's top tax rate is 47 percent; Canada 53; the UK 45; and the US 43. So we have a low tax rate system.Hon Michael Woodhouse: How many people pay it?Dr DUNCAN WEBB: Have a look at the OECD website. Have a look; it will tell you as a multiplier of the average wage what it is and ours is a high threshold. So our system's also progressive. In terms of that $180000 rate—the top 2 percent—what the other side are saying is that they want tax breaks for the top 2 percent and I won't buy it. Our system is progressive. That is to say the less you earn the lower rate you have; the higher you earn the higher rate you have. That seems fair to me and I'm very happy to confirm it. So we have a low rate at the lowest level. If you went up to $40000 10.5. It goes to 17.5 at $48000 30 percent at $70000 33 percent up to $180000 and 39 over that. Not everyone agrees with these tax rates and we have heard again and again that the 39 percent rate should go. The ACT Party in the select committee report said it simply punishes people who work hard—as if other people don't work hard. And we've recently heard the National Party saying much the same and they talk about fiscal drag. We've recently heard over the weekend that the National Party would reduce tax and do away with this rate. That's just a retread of just about every single National Party leader that has gone through this House—and goodness knows there's been a few!Let's talk about hard-working New Zealanders. I want to talk to you about an actual hard-working New Zealander: Chloe—not the one over there but another one I know. She's a single mum. She's got a pre-schooler and she's got an intermediate school kid. She works three days a week as a support worker one day a week for a not-for-profit. So she's got two jobs. She's looking after two kids and she earns $48000 a year or thereabouts. What would the tax cuts give her? They'd give her $112 a year. What would the tax cuts give someone who earned $288000 a year—which just so happens to be what the Leader of the Opposition gets paid? They'd get $7522. If you earn $288000 you get that much. If you're a hard-working New Zealander with two jobs and two kids you get $112. That is not a New Zealand I want to live in and that is why there won't be any tax cuts of that ilk from this side of the House. It's $112 for Chloe and $7000 for Chris thus exacerbating the very inequality that this party is committed to addressing. So that's why the majority of the select committee did not agree with the ACT Party and did not agree with the National Party and agreed to confirm the reasonable and progressive tax system we have.Let's turn to housing. We're working on addressing the inequalities which have exacerbated the housing problem and we're making progress. One of the things we want to do is address the issue of interest deductibility. In a high-inflation environment that is even more important. I want to try to step aside to something a little more technical. We asked advisers what the impact of inflation is on interest deductibility and we were told very clearly that the whole tax system works on nominal interest rates. That's kind of the headline interest rate not real interest rates and they can differ significantly. The real interest rate in simple terms is the nominal interest rate—the number—minus inflation. So when inflation is high interest rates can be low and effective tax rates are even lower. So advisers noted in December that the interest rate on a floating loan was 4.9 percent and inflation was 5.9 percent. What's the real interest rate then? Negative 1 percent.David Seymour: Oh!Dr DUNCAN WEBB: I know; it's math. It's called mathematics. What is more to be able to deduct the nominal interest as an expense when you're actually in real terms paying a negative interest rate is deducting for something which isn't an expense at all and that's just one of the reasons why it's entirely inappropriate to have interest deductibility in this framework. So that's going to come in progressively from 1 October but at the same time I want to make it clear that we wanted to encourage new home building. So new home builds are exempt. Commercial boarding houses—we explored that and we moved to exempt those and also significant repairs on dwellings which would not otherwise be habitable. That includes earthquake-prone buildings and leaky buildings or buildings that have been subject to a weathertight homes notice.But looking further there are a whole lot of other remedials as we say in there and I just want to touch briefly on cryptocurrencies recognising here in the tax legislation that there are financial assets that shouldn't be subject to GST and financial arrangement rules but also just around the definition of a cryptoasset. Anyone who's looked at it—and the Finance and Expenditure Committee was looking at this—recognises the distinction between cryptocurrencies or cryptoassets and these non-fungible tokens—assets which people see as having intrinsic value and which they sometimes pay large sums of money for. We wanted to make a distinction between the two so we defined what a non-fungible token is and said a cryptoasset isn't that. A non-fungible token was defined as a cryptoasset that contains unique distinguishing identification codes and metadata. We were assured by advisers that that's quite distinct from simply registration numbers that you might see on a bank note and we know that things like bitcoin and ethereum do have identifiers but they aren't unique codes.So it's actually an important point to make sure that that works and to make sure that the parliamentary intent is well known as crypto becomes more widely used. And of course there are a whole lot of other remedials as well including local body income making sure that tax from council-controlled organisations is exempt from tax and also GST invoicing. It was in some ways news to me that when I purchased something worth hundreds of dollars at the hardware store I was supposed to give my identifying details my name and address. We looked at that and said it's not how the real world works. At the committee we suggested that there be $1000 a day de minimis threshold to make sure that it's workable for everyday hard-working New Zealanders and to make sure that really it wasn't an onerous burden.Setting the tax rates every year is important. The suggestion from the National Party the same old tax cuts isn't going to work. Hard-working New Zealanders like Chloe need a decent tax system and good infrastructure a good health system and good education. That's why this tax bill is part of the system that does it. I commend it to the House.