Mallard Trevor: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
Mallard Trevor: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
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Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 We are at the technical stages of this bill the Taxation (Budget Measures) Bill where there is an opportunity to go through part by part and within the parts. Part 1 is the most substantial although I think that it is fair to say that Part 2 reflects a lot of what is in Part 1 and some additional things. Part 3 may be described as a bit more technical and not quite as substantive in the way that these things work. There will be within Part 1 areas that the Opposition are supportive of and there will be areas within it that we are opposed to. I think probably in my first call that it is worth going through the areas that we are supportive of and asking the Minister in the chair the Hon Peter Dunne a couple of questions because there is room for some explanation. 
Starting off with that I ask the Minister whether he can give some explanation as to the reasons for the CPI treatment of tobacco price increases. I think these are being excluded from CPI adjustments for the purposes of the benefit of national superannuation and I understand of war pensions. That is something that I can vaguely remember the background to and quite a lot of discussion on. But I think that it would be good if members who had not focused on that issue had an explanation of it. 
On the question of depreciation again this at first glance is pretty technical and might not mean much. As far as depreciation on buildings for rental purposes is concerned it is fair to say that the Opposition is broadly supportive of this part although later when we focus more on short-life depreciation of assets there will be more debate on that area because the Government is yet to convince the Opposition that its plans in that area are appropriate. 
As far as thin capitalisation is concerned the changes in the rules are logical. I think that giving the ability to shift the “safe harbour” regime from 75 to 60 percent and the ability for the Inland Revenue Department to look more carefully at transactions under or over that threshold are matters that I do not think there will be much argument on from this side of the Chamber. 
If we look at two areas at personal tax cuts and the GST increase there will be substantial opposition from the Labour Party and I expect from the Greens as well. As far as company tax is concerned it is an area where we would like to have more discussion with the Minister to work the issue through. Members on this side want some reassurance that we are not just moving to further subsidies for Australian banks. I think the Minister is pretty aware of the views of some members on this side—that is for New Zealanders the company tax rate is essentially withholding tax. In the end the people to whom the dividends are paid or who sell the company effectively end up paying the tax. For overseas owners it is effectively the final tax—certainly for the New Zealand taxation system—that they pay. The likely major beneficiaries of this will be the Australian banks. 
As I move through I say that the Inland Revenue Department has done a good job with major litigation over recent years. I think the banks thought they would be able to see the department off and I am pleased they did not and are paying. That is not exactly part of this but the point I make is that the very people and institutions that have been forced by the courts to pay their tax appear to be being forgiven some of that tax in the future through the changes we are making here. Of course I am not asking the Minister of Revenue to identify individual taxpayers but I would like him to give an indication as to groups of taxpayers that are most likely to benefit from this change and where it is a withholding tax rather than washing out as part of a final taxation rate. 
I want to focus the major part of my speech on GST and personal income taxes. The more and more we look at the detail in this particular area the more uncomfortable the Opposition is getting. We see a change to the rates of income tax from 38 cents to 33 cents for people who earn above $70000. Frankly I would find it pretty hard to argue if there was a threshold increase to $100000 or even $120000. I would not find it that hard to argue with if the vast majority of people who voted for the National Party at the last election had their tax effectively cut from 38 cents to 33 cents at the margin. It is not something I would support or promote— 
Chris Tremain 
: The vast majority of people who voted for National were under that threshold. 
Hon TREVOR MALLARD 
: I tell that member because he may not understand this that at the margins we now have working families are paying the top marginal tax rate. That is what the Prime Minister told us. I know the Prime Minister gets a bit loose; he is a bit Abbott-like with the truth every now and again. He gets a bit enthusiastic and he is not always right on the facts but I believe— 
Chris Tremain 
: Three-quarters of New Zealand workers’ tax is capped at 17.5 percent. 
Hon TREVOR MALLARD 
: That member can tell me if I am wrong. Chris Tremain can tell me that the Prime Minister is a liar if he wants to. 
The CHAIRPERSON (Lindsay Tisch) 
: The member cannot use the word “liar”—[ 
Interruption 
] I am on my feet. The member said “the Prime Minister is a liar”. Under Speaker’s ruling 43/6 members cannot use the word “liar”. I ask the member to continue. 
Hon TREVOR MALLARD 
: I do not think the Prime Minister is a liar but Chris Tremain might be contradicting me— 
Chris Tremain 
: I raise a point of order Mr Chairperson. If you alleged that the member called the Prime Minister a liar— 
The CHAIRPERSON (Lindsay Tisch) 
: I have ruled and the member knows exactly what I said. Members cannot refer to anyone as being a liar nor to say that they are not a liar. I know that the member knows what I am saying. I do not need any help in this matter. I invite the member to continue. I know it will be a robust debate over the next few hours and I ask him to continue in that vein. 
Hon Clayton Cosgrove 
: I raise a point of order Mr Chairperson. It may be that we do not waste the time of the Committee with this but I invite you to very carefully consider your last ruling and I think I might be joined by some colleagues across the aisle. If it is the case that we are defending somebody by not calling them a liar or saying they are not a liar we are in difficulty. 
The CHAIRPERSON (Lindsay Tisch) 
: I am on my feet. Let me say this: the slate is clean. 
Hon TREVOR MALLARD 
: I thank the Chair; I am glad we got there. I want to really thank Chris Tremain for his intervention as it was particularly helpful to get the truth on to the table whichever way it went—whether he was right or the Prime Minister was right or whichever side of the National Party was accurate. We know that no one voted for the Prime Minister to get a $1000-a-week tax cut. That is what he has come to this House to promote and vote for. Some of his mates will get tax cuts that are seven times that size. Some of his mates— 
Paul Quinn 
: That’s exactly what they voted for. 
Hon TREVOR MALLARD 
: No one voted for that. I am saying that most decent Tories would have accepted a lifting of the threshold to $100000 or $120000. They would have thought that that was fair—[ 
Interruption 
] 
Hon Clayton Cosgrove 
: I raise a point of order Mr Chairperson. It is an absolute rule in the House that a member cannot move his or her seat to take advantage. “Mr What’s-his-name” sits right at the back in the cheap seats and he has moved his seat to interrupt my colleague. 
The CHAIRPERSON (Lindsay Tisch) 
: I thank the member for that; the member is correct. I say to Mr Quinn the member on my right that interjections are fine but he also brought me into the debate by saying “you” and he mentioned the member by his first name not his full name which one cannot do. I know that the member’s seat is usually at the back and he has moved forward. I am happy to accept interjections and I am happy to acknowledge that this is a robust debate but I ask the member to tone it down. 
Simon Bridges 
: Mr Speaker— 
The CHAIRPERSON (Lindsay Tisch) 
: I have ruled on this matter and I am inviting the member to continue. 
Hon TREVOR MALLARD 
: Thank you— 
Simon Bridges 
: I raise a point of order Mr Chairperson. Mr Cosgrove referred to “Mr What’s-his-name”. I thought we had to use correct names in this House. 
The CHAIRPERSON (Lindsay Tisch) 
: This is getting silly. I thank the member for that intervention. The member knows exactly what needs to be done. I am inviting Trevor Mallard to continue. He has 1 minute 34 seconds to do so. 
Hon TREVOR MALLARD 
: The point I am making is that these tax cuts are inherently unfair. They are absolutely unfair because in the end although some loopholes are being closed to give lower and middle-income people a little bit of relief a massive GST impost is being put on those people to give the Prime Minister and people on similar incomes $1000-a-week tax cuts. No one from the National Party and certainly no one who ran against me in Wainuiomata told the public that they would be voting for the Prime Minister to get a $1000-a-week tax cut. We know that if National members had said that the Prime Minister would get a $1000-a-week tax cut they would never have been elected. If they had told the truth if they had had integrity going into the election campaign they would not have been elected. 
I finish the way I started an earlier speech which is to congratulate Peter Dunne on the minor change he made to this legislation to make it slightly more palatable than it might have been.