Parker DavidHon MICHAEL WOODHOUSE (National): Thank you Madam Chair. As I thought would happen we have got into a quite deep philosophical discussion about tax and that's what I love as a lapsed accountant. But I was mindful of the comment made by the Prime Minister in his post-Cabinet press conference yesterday when he was asked about whether Government spending was inflationary. What he said was: Well tax threshold changes could also be inflationary." and what he was really saying to New Zealanders was the Government knows better how to spend their money than they do. It's like: "Trust us. We're going to take that money out of the pockets of hard-working New Zealanders and spend it better than they can." Well I don't think hard-working New Zealanders would agree with the Prime Minister on that.But I have three questions for the Minister of Revenue. Firstly is he seriously asking New Zealanders to accept that the Government is committed to tax threshold changes? Because when they put back the punitive 39 percent top tax rate they did it at a higher threshold than when Michael Cullen did it. So actually that signals a commitment to tax threshold changes. I think that's a very long bow but I would like to hear from the Minister. I believe the Minister said that 40 percent of the benefit of the tax threshold changes goes to the top 10 percent of income earners. Was that the metric that I think he said? He could clarify—if I try and get that. He said something about a disproportionate benefit to upper income earners for tax threshold changes—he's not going to acknowledge that. Well let's pretend that that's what he meant. I would want to point out and ask the Minister if he can confirm whether the top 10 percent of New Zealand income earners actually pay somewhere in the region of 47 percent of income tax. So they're already disproportionately burdened with that tax obligation and we think that's fair; we think that is about right. But to then turn around and say they don't deserve the benefit of a tax threshold change because they are upper income earners is classic left-wing "play on the swings but not on the roundabouts" and that cannot be right. I also agree that it's fair that because of the income transfers that take place through accommodation supplements Working for Families and so on many middle income families actually aren't paying any net income tax. They're certainly contributing to the tax base but they're not paying any net income tax. So can he confirm then that the top 10 percent of income taxpayers are paying about 47 percent of the income tax? And he also said about tax as a proportion of the economy and that we're sort of in the pack in the OECD. Well that is not surprising if in a high inflationary environment one doesn't change tax thresholds. It's like "It's blue because it's blue." And I think those comparisons with the OECD countries can be very fraught because they have very different thresholds for a start. I mean Australia has a quite big zero tax threshold—I can't remember when it stops but I think it's something like $15000 or $16000—and we don't have that. I don't actually support that particularly necessarily; it's quite expensive. But also those income transfers the very high scales that some jurisdictions will go to—the amount of sales tax that is applied both at a state and federal level in those countries with whom we compare—make that kind of comparison pretty irrelevant. And by the way New Zealanders aren't paying tax in those countries. They're only worried about how much money the Government is taking out of their pockets and how that's changed over the last six years. And the answer is a lot and a lot; in fact a lot and a lot more. So I ask the Minister to reconsider and actually I think there is going to be an amendment tabled at some point. And it's not too late. We are setting the tax rates for this year. It's certainly not too late to do the right thing by the taxpayers of New Zealand who are being squeezed. I was at the supermarket the other day and if it made my eyes water I really dread to think how average-income earning families are coping. It was quite a revelation.Hon DAVID PARKER (Minister of Revenue): To clarify the 40 percent statistic that I gave I was making the point that the last time the National Party significantly adjusted tax thresholds they paid for it by an increase to GST that everyone paid and 40 percent of the income tax decreases were given by them to the top 10 percent of income earners."