Woodhouse Michael: Taxation (Budget Measures) Bill — In Committee 
Text is incorporated into the Bound Volume 
Woodhouse Michael: Taxation (Budget Measures) Bill — In Committee 
[Sitting date: 20 May 2010. Volume:663;Page:11129. Text is incorporated into the Bound Volume.] 
MICHAEL WOODHOUSE (National) 
: 
 I want to pick up on Ms Beaumont’s analogy of the four-pack of toilet paper and perhaps remind her in case her memory is a little bit short about what we saw under 9 years of a Labour Government. Does the member recall Dr Cullen’s “chewing gum Budget”? What happened to the chewing gum? He took it back. In those 9 years he said: “I’m going to give you a pack of chewing gum and then I’m going to take it back.” But we then we had the pièce de résistance: after several days the top tax rate was raised by 9 percent. We waited 9 years and what did we get? We got a block of cheese. 
I want to go through some inconvenient truths for our friends on the other side. Under this Budget 73 percent of income earners will have a top tax rate of just 17.5 percent. That is nearly half what it was under the previous Labour Government. That is not the top income earners but the middle and lower income earners. These people will be far far better off under this Government than they ever were under the Labour Government. People who earn the average income of $48000 a year will pay a total tax rate of just 15.3 percent. A family with two children does not start paying income tax until its income exceeds $50000. [ 
Interruption 
] The member mentioned GST. I find it astounding that the members Hipkins and Street—the latter has been a Crown Minister and sat around the table considering revenue bills—did not know that GST is not payable on rents. It simply is not. There is no GST on residential rents. Those members both mentioned it in their calls. I think those comments continue the ignorance around the sorts of effects that the tax arbitrage frameworks that Labour put in place after 9 years had on hard-working New Zealanders. 
Mr Burns talks about continuing the gap between the top personal income tax rate and the company tax rate. That was not the problem. The main problem was the large gap between the top personal income tax rate and the trust rate because that was the vehicle that top income earners were using to protect their income. The company tax rate is ultimately paid by individuals and they get imputation credits attached to them. Whatever that company tax rate is their personal income tax rate will be what it is. So the really important gap is the one between the trust rate and the top personal tax rate. I am very pleased to see that that has been lined up. 
Mr Cunliffe was very confused about loss attributing qualifying companies and in an astounding comment he made in his call in the first reading he said that Labour had put in place loss attributing qualifying companies but Labour had no idea they would be used for the purpose to which they were eventually used. God forbid loss attribution would be used to attribute losses! That just does not make sense. But it became worse with Dr Norman’s analogy of shoplifting I think it was. Does any member recall that comment in the first reading? He said that instead of controlling the shoplifting what National has done is lowered the price of goods and applied a fixed charge across all the goods. But here is the thing: using legitimate tax vehicles to manage one’s income tax liability is not shoplifting; it was perfectly legal and it was legal because it was put in place by the Labour Government with the full support of the Greens. 
But here is what the Greens really want to do: to have equity what they really want but do not say is to put all of the rates up to the top personal tax rate of 38 percent. If we want equity they say we should raise the trust rate raise the company rate—raise raise raise. Well that is what will drive our best and brightest New Zealanders across the ditch. That is what has been done over the last few years. It is the one thing we are No. 1 in the OECD on—the export of our best and brightest. I am very impressed to see that whereas a person needed to earn $228000 in New Zealand to pay less tax than in Australia that has just gone down to as low as $55000. My prediction is that those best and brightest will start coming back across the Ditch. I am absolutely delighted to see that the rot is stopping in respect of those very talented New Zealanders. 
I will go on and touch on the tilt because this Budget has support for what New Zealanders were already doing. The consumption and debt-fuelled growth that we saw after the last 10 years has stopped. People are not borrowing any more.