Dunne Peter: Taxation (Income-sharing Tax Credit) Bill — First Reading 
Dunne Peter: Taxation (Income-sharing Tax Credit) Bill — First Reading 
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Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (Income-sharing Tax Credit) Bill be now read a first time. 
 At the appropriate time I will move that the bill be referred to the Finance and Expenditure Committee. Income sharing for parents with dependent children has long been a core policy of United Future. The introduction of this bill forms part of our confidence and supply agreement with the National-led Government. 
The income-sharing proposals that this bill introduces have been the subject of two separate rounds of public consultation under two successive Governments. During the term of the previous Labour-led Government a Government discussion paper was released. Again that was part of a confidence and supply agreement commitment and it followed full consideration by Cabinet. The document canvassed people’s views on the idea of income sharing an arrangement that allows couples with children the option to split their income for tax purposes so that each partner is taxed on an equal share of their combined income. Because income tax rates rise according to the amount earned under such a scheme parents could ultimately end up paying less tax if for example one parent works full-time and the other chooses to remain home to care for their children. 
Around 90 percent of the submissions on that first discussion paper were in favour of some form of income sharing on various grounds including that it recognises the contributions of full-time parents in their homes and communities and that it balances the assistance available to parents who are in the workforce. I should acknowledge that at every stage of that process the previous Government was constructive and helpful and appeared to operate on a good-faith basis. All of that makes Labour’s current opposition to this legislation much harder to understand. 
I constantly receive very positive feedback from everyday New Zealand families about income sharing. New Zealanders react to hip-pocket realities. They know that income sharing is good for them and that no amount of political double-speak from politicians who might oppose it will stop them from recognising when something actually benefits them. The reality is simple: up to 310000 New Zealand families and nearly three-quarters of New Zealand children stand to benefit by anything up to $9000 a year and parents will have the choice of spending more time raising their children. The key word here is “choice”. Those who oppose this bill are in effect saying they wish to deny New Zealand families a very helpful choice in the way they might wish to raise their families. 
The second consultation round took place in December last year during the term of the present Government. We sought feedback on how income splitting might be delivered as an annual tax credit similar to Working for Families assistance. Again most submitters supported this approach. The bill introduced today reflects public feedback from both consultation rounds and sets out who would be eligible how the tax credit will be calculated the rules around how to apply for the credit and how it should be paid. I particularly acknowledge the support of both National and the Maori Party during the development of this legislation and in its first reading today. 
In essence under an income-sharing arrangement each partner in a relationship caring for dependent children under 18 years of age would be taxed on an equal share of their combined income. At the end of the tax year they would be able to apply to the Inland Revenue Department for a tax credit based on the difference between the amount of tax they would have paid on an individual basis and what they instead pay based on half their combined income. 
Members may have noticed that I am using the term “income sharing” rather than the term “income splitting” which was used during the consultation process. Adopting the new term “income sharing” is a deliberate choice. First it more accurately reflects the status of couples with children as equal partners in raising their families. Second it provides a more accurate description of the arrangement in law. The bill defines parents as being spouses civil union partners or de facto partners similar to the Working for Families legislation. They would have to be New Zealand tax residents for the whole tax year before they could claim a tax credit and one of the partners would also have to be the principal caregiver for the dependent child or children. Under the provisions in the bill the shared care credit would also be available to parents when they have separated if they have subsequently re-partnered and are sharing responsibility for caring for their child or children for at least one-third of the tax year. 
Although the income-sharing arrangement has the potential to benefit many families it cannot and is not intended to be a suitable arrangement for all couples with children. For some depending on their income the option to claim the credit will be of marginal value; nor will the credit be available for certain parents who do not meet the eligibility criteria such as sole-charge parents. I am aware that some will view this aspect of income sharing as an infringement on human rights; some members have no doubt observed the report from the Attorney-General under section 7 of the New Zealand Bill of Rights Act that accompanies this bill. 
On this matter I need to make the obvious point that no one benefit fits all. That is why we have targeted assistance for groups with particular financial and social needs. Arrangements are already in place for people who are sole-charge parents—for example through the childcare subsidy the minimum family tax credit childcare rebates and the domestic purposes benefit. For many families income sharing recognises the real financial choice that many couples with children often have to make about whether they work full-time and employ others to care for their children or whether one partner stays home to care for the children possibly on a part-time basis. 
The proposals that this bill contains will give parents more choice about their work and caring roles. As such those proposals give greater recognition to the equal role and value of both parents in raising their children. Too often we hear the lament from parents that they would have loved to be able to spend more time at home with their children when they were growing up but simply could not afford to do so. Income sharing extends that option to many more parents and gives them choices that they currently do not have. In my view it is not for this House to continue to deny them those options. 
I hear the argument from those who oppose income sharing as being unfair because they say not everyone will benefit equally. Although differing income levels will mean differing levels of benefit it is exactly the same with any income-related tax change. I cannot see any logic in denying parents the choice of income sharing if it suits their circumstances. After all if they were in a business relationship they would be able to share their incomes for tax purposes in precisely the way that this bill proposes yet I do not hear any suggestion that that is unfair. Raising a family is surely the most basic and important business that every one of us will ever be involved in. Therefore surely it is only right to give parents as many options as possible to enable them to do so to the very best of their abilities. Against that background it is with considerable pride and pleasure that I commend this bill to the House.