Cunliffe David: Taxation (Tax Administration and Remedial Matters) Bill — First Reading 
Cunliffe David: Taxation (Tax Administration and Remedial Matters) Bill — First Reading 
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Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I thank the Minister of Revenue and I rise to oppose the Taxation (Tax Administration and Remedial Matters) Bill. I do not oppose the bill because of its provisions on tax secrecy. I do not oppose the bill because of the new privacy framework. I do not oppose the bill because of tax pooling and I do not oppose the changes to donee status. But Labour most definitely opposes the change to abolish gift duty. We do so because politics is about priorities and this is one more little straw that is in danger of breaking the camel’s back of the nation’s fiscal balance. This abolition of gift duty is not a matter of $70 million or $100 million. The reason that gifting-tax avoidance is limited to that small amount of money is precisely because rules exist. If the Minister removes the rules I say to him that he will watch a mushrooming of avoidance structures just as have occurred under loss attributing qualifying companies and under trusts. 
It used to be the case that the once-proud National Party campaigned on the basis of personal responsibility. I call upon the House and listeners out there to think just for a moment about what personal responsibility means in a time of recession. New Zealanders around the country are doing it tough. God knows that West Coasters have been doing it tough! Cantabrians have been doing it tough. But in my electorate of New Lynn small businesses retailers and employers are doing it tough. In a recent poll one in four New Zealand families said they were worried about losing the roof over their heads. We know from statistics released in the last 2 days from Statistics New Zealand and Treasury that the average household family income has gone backwards by $30 a week in the last year—by $18 for the average salary of an individual. Against that background of real suffering I call upon the Government to walk the talk on personal responsibility and personal responsibility in the tax sphere means that everybody pays their fair share. Everybody pays their fair share. 
There is no room for any form of legitimised avoidance in times of recession when New Zealanders are fearful of not being able to keep the roof over their heads put food on the table pay National’s extra GST or get by. They do not want to be told that only half of the top hundred taxpayers are on the top tax rate which is what the Inland Revenue Department told the Tax Working Group. They do not want to be told that after two rounds of tax cuts that have overwhelmingly benefited the well-off—by cutting the top tax rate firstly from 39c to 38c and then by cutting it all the way to 33c—42 percent of the tax remission went to the top 10 percent of earners. New Zealanders do not need yet another gift to the better-off. Politics is about priorities and sometimes it is the little things that matter. Sometimes it is the little things that people out there can grab on to and get their heads around and say “Ah ha! Now I understand what this Government is really about. Now I understand the difference between National the party of the few and Labour the party of the many.” Labour opposes this bill because this bill is a bill for the few. 
Chris Tremain 
: Party of the many—that’s rubbish! 
Hon DAVID CUNLIFFE 
: The member may laugh but this is a bill for the plutocrats of Remuera who want to gift their equity to little Johnny or little Jane—someone who by the way might just have a lower tax rate than mummy or daddy. Those are the issues. 
It may be the case that there are perfectly legitimate reasons for gifting. Labour is not saying that anybody who indulges in gifting is avoiding tax—members should not misread me in that. There are perfectly legitimate reasons for gifting. But as of today it is possible to gift tax-free up to a threshold of $27000 per annum which is enough for most families. It is enough for most people. But it is not enough for the National Party because its constituencies demand the right to gift more than $27000 per annum per man woman and child because such is the burden of income to be spread. 
Well that should not be in these tough times. If it is good enough for ordinary Kiwi families to be told to pull in their belts then it is good enough for the Government to put up legislation that reflects the needs of hard-working New Zealand families. That is why our leader was talking yesterday about the squeezed middle the hard-working New Zealanders who are just well-off enough not to qualify for anything in the benefit or welfare systems. They have jobs. They are plumbers they are secretaries they are technicians and they may be taxi drivers—the squeezed middle—and this bill does not help them. This legislation is not a priority for the middle because those people do not have a spare $20000 each to give away each year. 
I ask the chief Government whip: $27000 of post-tax income is how much pre-tax income? Is that too much maths for him? The answer is that it depends on the tax rate. I thought the whip might buy into that one but no strange silence broke out on the Government benches when members were confronted with such a piece of mathematics. Dr Paul Hutchison the highly qualified representative of the medical sector is there looking at me and grinning because he knew the answer but he was not going to tell the chief whip—they can sort that out later. 
Labour will look forward to hearing the submissions on this bill and we hope to hear from a large number of ordinary New Zealanders who will want to express their views about whether the abolition of gift duty really is a priority for tax reform. It will go down as one of those little emblems one of those little tokens one of those little moments of truth at a time when the recovery is not happening and people are wondering about their futures. They will hang on to this and say “Goodness me! Wasn’t it enough to have two rounds of tax cuts for the well-off? Wasn’t it enough to take the top tax rate all the way down from 39c to 33c? Wasn’t it enough to give two-thirds of the money to one-third of the people? Wasn’t it enough to give 30 percent of the money to the top 5 percent?”. No it was not; we are going to make it easier then for them to gift their winnings to little Johnny who happens to be on a lower tax rate than mum and dad. 
This is what Labour would do. It is that time in the cycle when the public wants to know what Labour would do. Labour would not abolish gift duties. Labour would crack down on avoidance. Labour would hack into the $2.3 billion per annum of losses on loss attributing qualifying companies alone and Labour would ring-fence loss attributing qualifying companies. Labour would ring-fence loss attributing qualifying companies. There is no reason why the losses on a company should be written off against personal income. It is fair enough to carry them forward to future profits. It is fair enough to allow the company to manage between good times and bad. It is fair enough for a company to write off legitimate expenses but it is not fair enough to use a company structure to avoid paying personal income tax because in these tough times personal responsibility means that everybody pays their fair share—everybody pays their fair share. 
The last thing New Zealanders need to hear is that it is a priority for this Government—for the plutocracy—to ram through the House in a week when we face urgency a bill to allow them to gift to little Johnny at a lower tax rate. That is not a priority for the New Zealand Parliament. It is not a priority on the gates of Christmas. It is not a priority in a week when urgency is looming. It is not a priority for the Labour Party. Labour opposes this bill which in many ways is innocuous but the abolition of gift duty will go down as an emblem of a Government that has lost touch with ordinary New Zealanders with people who are doing it tough in a recession and with its own values of personal responsibility. It has lost touch with the electorate and is soon to lose touch with the Treasury benches. Opposition has been fun but we are over it; we are ready to govern.