Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
[Volume:614;Page:10275] 
3.  
CLAYTON COSGROVE (Labour—Waimakariri) 
 to the  
Minister of Finance 
: Has he received any proposals for changes in the tax system? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Yes. I have received an interesting question about how the current progressive income tax system could be replaced with a fiscally neutral proportional income tax—that is a flat tax—a move that would leave 90 percent of families worse off. 
Clayton Cosgrove 
: Could he tell the House where the proposal originated? 
Hon Dr MICHAEL CULLEN 
: It originated in two written questions from National’s associate finance spokesperson John Key. Only the top decile would benefit from the proposal—families earning over $88000 a year. They would get an average income tax cut of $8000 while the rest of the population would pay on average $1600 a year more. 
Dr Don Brash 
: Can the Minister tell the House why this Government commissioned an expert review of the tax system—a review that recommended a flatter tax structure in order to encourage growth—then proceeded to ignore it? 
Hon Dr MICHAEL CULLEN 
: Because we are influenced by a range of overseas experience not least that of the Clinton Government whose first move on tax was to lift the top tax rate. He had 8 years of unparalleled economic success which has not been repeated I might say under the current administration in the US with its tax cuts. 
Rod Donald 
: Has the Minister also received a proposal from the Green Party to give hard-working low and middle income earners a 6 percent tax concession on their superannuation tax to match the concession that Labour has already given well-off wage and salary earners; if so why will he not treat all workers the same to encourage them to save for their retirement? 
Hon Dr MICHAEL CULLEN 
: No I have not because the proposal was in relation to the tax paid by the employer on specified contributions to superannuation schemes—not by the employee. 
Rodney Hide 
: Does he believe that lowering the top rate of personal income tax and lowering the company rate of tax would all things being equal be a plus for the economy; if not why not? 
Hon Dr MICHAEL CULLEN 
: No. I am confident that whatever the top income tax rate is the member will work just as hard or as little as he chooses. 
Mr SPEAKER 
: Supplementary question Gordon Copeland. [ 
Interruption 
] The member is about to be out. It is not an outrage. I have called a member on a supplementary question and it will be heard in silence. 
Hon Richard Prebble 
: I raise a point of order Mr Speaker. We do expect Ministers to take questions seriously. When the Minister makes a personal comment that Mr Hide will work just as hard no matter what the tax rate is that is an absurd statement. The Minister is suggesting that if he lifts the tax rate to 100 percent so that Mr Hide gets no money—an experiment that the Chinese actually did try and I think 20 million people died—[ 
Interruption 
] It was called the Great Leap Forward and no doubt that is what the Minister will be doing to us next. But the idea that a 100 percent tax rate would have no impact on the New Zealand public! Now he might say that he did not mean 100 percent; well maybe it was 90 percent that he had in mind! 
Mr SPEAKER 
: Well I always appreciate the member’s comments on points of order but whether the comment is absurd is a matter for the judgment of people listening and not something that I interfere in. 
Rodney Hide 
: I raise a point of order Mr Speaker. I know that we have a situation where almost any answer will do but my question was “if not; why not?” and although I may be a very productive member of Parliament I do not think I am entirely responsible for the economic growth of New Zealand as Michael Cullen would suggest. I suggest that you require that he answer seriously that question on an economic matter. 
Mr SPEAKER 
: I ask Dr Cullen whether he would add to his answer. 
Hon Dr MICHAEL CULLEN 
: I am happy to. Let me first of all point out that since the Government raised the top tax rate we have enjoyed some of the greatest success in economic growth that we have had for a very long period of time. But picking up a point that has just been referred to when China had no income tax at all during the Cultural Revolution its growth was zero; now that it is moving to a market economy it actually has income tax and its growth rate has gone up. [ 
Interruption 
] 
Mr SPEAKER 
: That is Mr Hide’s final warning. He is out next time. He has interjected once too often for my comfort. 
Gordon Copeland 
: Can the Minister confirm whether he has received a request from the United Future party to change the tax system to incentivise participation in the workforce by increasing the income of working families relative to those on benefits? 
Hon Dr MICHAEL CULLEN 
: Yes I have and the Government is giving that very serious consideration indeed. The House and the country can expect announcements in that respect in next year’s Budget which I look forward to all parties voting for.