Willis Nicola; Kuriger BarbaraTAXATION (BUDGET MEASURES) BILLFirst ReadingHon NICOLA WILLIS (Minister of Finance): I present a legislative statement on the Taxation (Budget Measures) Bill.SPEAKER: The legislative statement is published under the authority of the House and can be found on the Parliament website.Hon NICOLA WILLIS: I move That the Taxation (Budget Measures) Bill be now read a first time.Tonight in this House we are going to reduce taxes paid by working people for the first time in 14 years. This tax relief is long long overdue. It is owed to New Zealanders who work hard every day and yet have given more and more of that hard-earned wage to the Government only to watch that Government over these past six years do less with their money than they would have done with it; deliver them poorer results; spray their money everywhere; drive up inflation; drive up interest rates; and leave them the working people of this country in a cost of living crisis.I'm going to take you through how this bill delivers tax relief. But as I embark on this speech here's the question I think all the members here should be asking: who in this House in their right mind in a cost of living crisis would oppose tax reduction for working people? The question we have to ask—because there is a party in this House that once called itself a party of the worker—is: will that party oppose working people being able to keep more of their own money? That is the question that I'm very interested to see answered tonight.Because as members will be aware today I delivered the coalition Government's first Budget and it addresses the urgent issues facing New Zealanders: the high cost of living. We are providing relief for New Zealanders and their families who have been suffering the effects of inflation; those New Zealanders who when they've been standing in the supermarket checkout aisle have watched the numbers flick on the screen and wondered if there's enough money in the EFTPOS account this week to meet those groceries; those New Zealanders who when they go home from work see that petrol light on and think Just one day till payday; just one more day till I can fill it up."; those New Zealanders who have said to their kids "Sorry no swimming lessons this year kids. We can't afford it anymore." Well this Government has heard the cries of those New Zealanders and we are going to give them what they deserve which is tax relief.It is prudent expenditure to give tax relief because actually you have to ask yourself this: is there anything that is a higher priority than helping people keep more of their own money while encouraging them to participate in work to contribute to our economy? Tax relief is an investment in increased productivity. The tax relief package that we are announcing today in this bill is very seriously targeted at families with children at low and middle income people because we know that they are the people who have suffered most through Labour's cost of living crisis.This bill gives effect to several measures. The first and biggest of the proposed amendments provides tax relief to individuals and families by increasing the personal income tax thresholds for the first time in 14 years. Raising the thresholds means that you get to keep more of the money you earned before you get moved into a higher tax bracket. We've had a situation in New Zealand where unlike many countries in the developed world who automatically adjust tax thresholds to compensate for the effects of inflation to allow for nominal wage growth or unlike other countries in the world who while not automatically have stepped in to do it our country hasn't done it for 14 years.So the effect is that even people on average incomes have been pushed into higher and higher tax brackets forced to give away a higher proportion of every dollar they earn to the tax man. The effect of this has been that for a median income worker; for a typical worker their wage now puts them in a much higher tax bracket than it once did. Even a minimum wage earner if they work a few more hours a week is paying 30c on the dollar in tax. So this bill that we set down tonight is addressing that.Let's step through how it works. So the lowest income tax rate for example is 10.5 percent. It currently applies to all income earned from a job up to $14000. In an atmosphere of high inflation people are being pushed into those higher tax brackets. Yet with reduced spending power people are worse off and so is our economy. So we are changing that threshold to $15600. That means from 31 July someone on that level of income will be able to earn $1600 more annually before they begin to pay the higher 17.5 percent tax rate. Currently any personal income earned between $14000 and $48000 is taxed at 17.5 percent and anything earned over that takes you into the next highest bracket of 30 percent. The new threshold for paying the 30 percent rate will be $53501. That is $5500 annually which will be taxed more fairly at the lower rate of 17.5 percent instead of 30 percent.Is it any wonder that even Michael Cullen's Tax Working Group said that if you don't adjust tax brackets for inflation you destroy the progressivity of the tax system? That actually—[Interruption]—well the Tax Working Group acknowledged that if you don't address fiscal drag you make your tax system less progressive. This is actually about helping the low and middle income people and workers of this country. Then as we step through any income you earn over $70000—and bear in mind members that the average wage is now $73000; any income you earn over that is currently taxed at the higher rate of 33 percent. Well we're changing that threshold to $78100 so more of your income will be taxed at the lower rate. The bottom line is this: our changes mean that people on low to middle incomes will pay less and they will be keeping more of what they earn.Now we have also got measures in this bill which ensure that tax relief is really targeted at those lower and middle income families. We are expanding eligibility for the independent earner tax credit to boost the wages of those earning $70000 or less. This will boost their take-home pay. We are also increasing the in-work tax credit for working parents. This boost will ensure that those families who are really struggling with the cost of living will get more money in their after-tax pay.Finally this will also introduce the FamilyBoost payment. This is something that is particularly close to my heart because any of the people in this House who know people with young children will tell you that that is a really hard financial time in families' lives. They face high housing costs as their family expands often their working hours have been reduced as they juggle childcare and then the childcare costs they face are often extremely high. Well the FamilyBoost payment will ensure that working families can get up to 25 percent of a rebate of every dollar of childcare fee that they pay. The effect is up to $150 more for those families every fortnight. That is meaningful relief and I know it will make a difference.When I look at this tax bill and I think about what it represents I think about the people who I have spoken to in recent months and who I talked to on the campaign trail; the people who had taken on extra jobs Ubering at night just so they could pay the rent; the people who told me that they'd had to say no to chocolate biscuits at the supermarket because they couldn't afford it any more; the people who work two jobs three jobs to put food on the table.They watched while the last Government said that they needed every one of those dollars; they needed every one of those dollars in tax and then they wasted it on three waters on TVNZ-RNZ mergers on more officials in the back office. That was an injustice because actually working people deserve to keep more of their own money; they deserve a Government that will be as disciplined with its spending as they are. We have in this Government a Government that is committed to that; who has gone out and found the savings; found the reprioritisations line by every line so that we can put money where it counts: in the back pockets and bank accounts of New Zealanders.I'll leave you with these numbers: 727000 households getting at least $75.00 more a fortnight; 187000 households getting at least $100 more a fortnight; on average households getting $60 a fortnight; and on average households with children getting $78 a fortnight. This is real relief and the test for those who claim to represent working people is: would you really really oppose it? Because if you do shame on you.DEPUTY SPEAKER: The question is that the motion be agreed to."