Hide Rodney: Taxation (Annual Rates of Income Tax 2007-08) Bill Taxation (Business Taxation and Remedial Matters) Bill Taxation (KiwiSaver) Bill — Third Readings 
Hide Rodney: Taxation (Annual Rates of Income Tax 2007-08) Bill Taxation (Business Taxation and Remedial Matters) Bill Taxation (KiwiSaver) Bill — Third Readings 
[Volume:644;Page:13776] 
RODNEY HIDE (Leader—ACT) 
: 
 The performance of the Rt Hon Winston Peters in the House just before illustrates why we have got ourselves in such a muddle over tax policy. It was all about politics and grandstanding and nothing about principle or sound policy. Just to recap I remind members that all of the political parties were discovered by the Auditor-General at the last election to have spent money outside what the rules were considered to be and every party—some begrudgingly—paid the money back. Mr Peters and New Zealand First did not. They were going to take a legal case they held off and they kept the interest apparently on their money all that time. Then rather than pay back the money to the taxpayer as every other party did they grandstanded and had their picture taken giving the money to a hospital. That is like a taxpayer who on being found not to have paid his or her tax does not actually pay it back for 2 years and does not pay any interest or any penalties but who then gives the money owed to the taxman to his or her favourite charity gets his or her picture in the paper doing so and says: “Look at me how wonderful I am!”. There is nothing principled or sound about that. 
If Mr Doug Woolerton wants to keep chirping in as he does he and his party should announce where the money that New Zealand First has been spending has actually come from—not just the money it paid to the hospital but the money that Mr Peters spent in taking Bob Clarkson to court—money that has never been declared. I say to New Zealand First members that before they start giving some bad motives to the National Party or to the ACT party over what those parties are doing I think they should be a bit more upfront about where their leader has been getting his money from all these years. 
As to this bill I say that the problem is that there is no principle there is no sound policy and there is no forward thinking in anything that this Government is doing in the area of tax. Let me explain. The first thing we should do with a Government is decide what we want that Government to do. Once we decide what we want the Government to do we can then go and figure out how we raise the money for that. But that is not what this Government has done. It has sat on a pile of cash and asked “How can we spend it?”. In fact it has asked “How can we get more?”. It has put up taxes and charges to get more money to spend rather than think about what New Zealanders want their Government to do. 
The second thing we should do having decided that yes it is appropriate that the Government spends this amount of money is raise tax as efficiently and as effectively as possible because a poorly designed tax system puts costs on the economy—that is to say on all New Zealanders. The costs are not just the cost of filling out the forms the costs are what is called in the jargon the dead weight costs of tax—the costs the trades the deals the business the jobs and the opportunities that are not realised because of the tax system that this Parliament has put in place. 
If people think like that they will want this—they will want the tax system to be fair. It is fair to say that fairness is somewhat in the eyes of the beholder but let us discuss both concepts. If we want a tax system to be efficient—that is to raise a set amount of money in the least costly way—then indeed we will have a low flat tax on income or a consumption tax like GST. That is the way we will do it. And we will say to ourselves: “We are not going to have a tax system that is designed to push people a certain way or that tells us how to spend our remaining bits of money left after the tax has been taken.” No because when we do that we distort the economy we add costs to the tax system and we complicate the tax code. 
So we would be looking for maybe a flat tax of something like 18c in the dollar and a GST of 12.5c in the dollar and then people would be left with the money above that to spend as they choose not as politicians think they should choose. That is what we would be doing; not saying “We think saving’s a great idea. Let us allow people to keep some of their money if they save it.” or “We think research and development is a good idea and we will give tax breaks for that.” No we would not say that because that is just politicians telling people what to do with their own money. 
Here is another thing. We would not be having this argument about tax rates of 39c and 33c in the dollar because we would be thinking about tax from the point of view of efficiency and fairness. We would say that the fair proposition is that if someone earns twice as much money as others they should pay twice as much tax—not three times as much not four times as much and not 100 times as much as can happen under the Labour Government but twice as much. People can live with that but they cannot live with the idea that as they earn more money they should pay not just progressively more tax but exponentially more tax because that quells any incentive to be entrepreneurial to invest and to get ahead. That is another feature we have seen in our current tax code. 
But there is a big elephant in the whole room of this debate about tax and it is the one that I think we have to link in much more closely—that is we cannot talk about tax cuts or what tax rates should be unless we get Government expenditure under control. As long as politicians sit there and view the cash they take off New Zealanders through the tax system as a war chest to spend on policies to win an election then no tax cuts will be sustainable taxes will continue to rise New Zealand’s economy will continue to be sluggish our performance will be poor and our best and brightest will leave for overseas climates. In order to get a strong economy in order to get savings and in order to get interest rates down one thing is needed and that is for the Government to get its own spending under control. 
Government spending is not under control. This Parliament cannot begin to scrutinise the spending of Government departments that are running out of control. The budgets are simply too big. When I first came here I made a bit of a name for myself by exposing the odd million dollars $10 million or $20 million that was wasted. I made a bit of a name for myself but I soon realised that those sums were a pittance because while I was doing that this Parliament had gone from spending $100 million a day every day to $150 million a day. That is what happened. While we were saving by exposing the odd scandal of around a few million actual Government spending was going up by billions. 
What should we do about it? It seems to me and to the ACT party that we do need some discipline on ourselves and on Governments to constrain Government spending. I think we should agree to hold Government spending at the rate of inflation. How is that for a start? Then Government spending can increase to compensate for inflation but it cannot go beyond that. We constrain ourselves. If the Government wants to spend more money there is a simple solution to that: ask the people. Let us have a referendum and say “Look we have all these great projects. We have got KiwiSaver and this and that and we want to spend the money on that.” Let us ask taxpayers if they want their taxes to go up this year at a rate faster than inflation. I know that it seems odd to people in this House that we would actually ask for taxpayers’ consent but after all it is their money. Thank you very much.