Groser Tim: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
Groser Tim: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
[Volume:644;Page:13738] 
TIM GROSER (National) 
: 
 As with my other colleagues I think it is really important to go back to first principles when we look at this massive complex bill and see the giant central piece of the jigsaw puzzle is simply not there—a coherent and strategic approach to tax reform which is the very purpose of this massive undertaking and which this Government has singly failed to address. The reason it is the central issue and the reason it will be one of the central stories next year as the political competition heats up is because fundamentally we are a market driven economy. That means that people move themselves and their resources in accordance with economic incentives which are vitally influenced by tax policy structures. Therefore the absence of any coherence in the life of this Labour Government since 2000 towards a strategic approach to tax is a massive missing central piece of the political jigsaw puzzle. 
The idea that perhaps we could have looked at this in a closed economy setting 30 or 40 years ago is completely out of date in light of the rise of the global economy. The often quoted facts about this massive exodus of New Zealanders—not simply to Australia but elsewhere—is perhaps the clearest illustration that members of the public can fully understand the need to have a competitive tax structure. Even when we look at the bits in this curate’s egg that we like such as the reduction of the corporate tax rate we see that we are lacking coherence there. This is not an overall strategic approach and I will just mention two or three of the obvious reasons why it is not. Firstly it is not a comprehensive approach to business tax reform. What we know is that there were—from memory—75000 individual proprietorships and 44000 partnerships in New Zealand in the year to December 2006. If we were to have had a comprehensive approach to business tax reform we would have had some solution for those people. 
The second obvious point is that we all know the issue of disintermediation in tax and banking policy—we are about to discuss that in a bill coming up shortly the Reserve Bank of New Zealand Amendment Bill (No 3). What the Government has now done by failing to have a strategic approach is open up a massive wedge of 9c in the dollar in relation to the top marginal rate. I find it laughable to use the phrase “top marginal rate” when I know it cuts in at $60000 gross tax but nevertheless that is the decision the Government has made. To me $60000 a year does not sound like an enormous amount of money—and we could ask any nurse doctor or teacher earning that salary whether he or she feels “rich”—but that is meant to be the threshold for cutting in at this tax rate. So this gap has been opened up and the lack of a coherent strategic approach now creates this problem. So yes bits of this legislation make sense but overall when we look at this massive document we have to say it is a lack of strategy and a lack of coherence. 
More recently we have heard the Prime Minister in particular rabbit on about the tax being consistently made in respect of the surplus. She said: “Well nobody told us. Treasury got it wrong. Treasury didn’t tell us.” What a load of cobblers—I do not think that is unparliamentary language Mr Chairperson. Let me quote directly from the Treasury advice to the incoming Government in 2005. Members will recollect the Prime Minister’s spin that nobody told the Government it had a surplus and nobody told it about income tax reform. Let us reflect on the following statement to the incoming Government 2 years ago: “high marginal tax rates on personal and company income are more likely to have a negative impact on growth than others by inhibiting the decisions that drive investment and enabling people to make the most of their economic opportunities.” There are a dozen other such statements from Treasury contained in documents that even we have public access to going back years that indicated to the Government if it had been of a mind to listen the need to address the problem of growing surpluses the need to address the growing competition in tax policy and the need to advance a coherent and strategic approach to these issues. The reduction in corporate tax to 30 percent might have been a pretty hot policy position to take 15 years ago but not so today.