Dunne Peter: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
Dunne Peter: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
[Volume:672;Page:18945] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I am happy to put Mr Nash out of his excitement over the status of the company tax rate. Legislated for in Part 1 of this Taxation (Annual Rates and Budget Measures) Bill is a company tax rate of 28c in the dollar. The Government has no intention of changing that. It is not in our forecast and it is not on our horizon. The reference the member makes if I recall it correctly actually relates to provisions in confidence and supply agreements written after the 2008 election. It is a commitment really about the alignment of rates. We have achieved two-thirds of that in terms of the trust and personal rates being aligned. The outlier is the company rate. Any alignment will be downwards not upwards. I assure the member of that point. 
Stuart Nash 
: I’m just quoting from the Budget documents. 
Hon PETER DUNNE 
: I am simply responding. The member asked a question; I am giving him a response that is accurate in the circumstances. 
I have listened to some of the discussion this morning about the ongoing argument about high tax versus low tax. I will say to the Committee that frankly our international competitiveness is important. It is a reality that a small isolated trading nation has to deal with every day of the week every week of the year. Therefore our tax rates however they are structured cannot afford to be too far out of line with those of major competitors. Having said that I am not particularly interested in international league tables because really we have to do what we see is best for our own interests in this country. 
If we turn it on its head the reality is that if we have a high tax-rate system such as the one that Mr Nash seemed to be advocating going back to a top tax rate of 39c in the dollar at a time when there is already an argument that people feel that the grass is greener on the other side of the Tasman all we will do is fuel that fire. Then the argument about who is the last person to turn out the light becomes that much stronger. 
I will reiterate the point that Mr Foss made because it is the key here. The Opposition argument about the unfair incidence of tax might have a sliver of merit were it not for the reality that as a result of the changes we made last year in reducing particularly the bottom two rates we now have a situation where nearly three-quarters of all taxpayers face a marginal tax rate of no more than 17.5c in the dollar. That is something we should be lauding extremely loudly because we are well placed in terms of any comparable society—notwithstanding my earlier comments—in terms of the low incidence of personal tax on the bulk of our population. 
Opposition members seem to be fixated but not on that. I would have thought given their concern they would be out there championing that tax rate because it is for the constituency they claim to represent. What they seem to be fixated on is not the 17.5c but the fact that a few people—and Mr Nash made the point that they are a few people—have a tax rate of just 33c in the dollar on their income. The reality is that if Opposition members actually looked at where New Zealand’s tax revenue comes from they would see that it falls unevenly on those people at the top. We do not have the wealthy middle class that the United States has for instance. We have a very long slow progression to a comparatively small group of people at the top of the income scale. 
The Opposition argument—and I am not sure whether they are talking about tax cuts for people down the scale—certainly seems to be for some sort of ideological reason and no other as far as I can see that the people at the top should pay more and should always be charged more. What we are saying here is that the tax rates in this bill are in balance with the country’s requirements. It is important—and it is great—that we have a marginal rate of 17.5c for three-quarters of our population. The fact that we have not gone into—I think Mr Woodhouse used the comment—uber-taxes for those at the top end of the scale demonstrates a fundamental sense of equity. If we go down the path the Opposition members are talking about we would be saying that if people earn to a certain point we will keep a relatively low tax structure in place but if people earn beyond that we will penalise them. That approach is not about celebrating achievement; it is about penalising success. That is the fundamental divide. Part 1 puts in place a tax regime that is fair and equitable and will last.