Tremain Chris: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading In Committee 
Tremain Chris: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading In Committee 
[Volume:651;Page:121] 
CHRIS TREMAIN (National—Napier) 
: 
 Kiwis are breathing a sign of relief at the speed with which this new Government is addressing the work order that we took to the electorate over the election period. We have put our new bill on the Table and we are making progress already. You know this is what New Zealanders have been wanting for the last 9 years—a Government that is focused on its agenda focused on the issues that matter and making progress. Even just in the last few weeks I have been out in my electorate of Napier talking to my constituents. Do members know what they are saying? They are saying “Thank God we have a Government in there now that is focused on the issues and on taking this country forward.” That is what they have seen have they not? 
Our constituents have seen a Government put together within 7 or 8 days—quick-smart action. They then saw a Cabinet put together within a couple of weeks—action again. Then our Prime Minister—an aspirational Prime Minister—quickly went to APEC then to London to get a feel for the world financial crisis and an understanding of what global leaders were doing with that crisis. Then he came back here and made sure that the promises we took to the electorate were being delivered today. So here we are in the second reading of the Taxation (Urgent Measures and Annual Rates) Bill which delivers on that agenda. That is why constituents out there are saying “Thank goodness we are seeing a Government that is focused on the issues and taking the game forward for us.” 
The second reading of this bill includes changes to personal tax rates and thresholds and I will talk to that in some detail as we go through it. It also includes the introduction of a new independent earner credit for middle-income New Zealanders. Those are the Kiwis out there the battlers who have continued to be pushed into higher tax brackets—the teachers the policemen and the wharfies. They have been the traditional constituency of the Labour Party but they have been forgotten about by that party over there and they have been pushed into continually higher and higher brackets. That is why those members are sitting on that side of the House today and we are sitting on this side. We are focused on the issues and on addressing those tax thresholds. We are bringing those hard-working Kiwis back to a level of taxation that is affordable for them and where they can ensure they can put bread on the table for their families. Those families do not have access to the support that has been delivered over the last 3 years. They have continued to be pushed into higher and higher tax brackets and that has hurt them so we are unashamedly focused on those taxpayers in this bill. 
The third area I will focus on is the changes being made to KiwiSaver making it more affordable and sustainable. I will also touch on the repeal of the research and development tax credit. 
It is important that this bill be passed into law and passed into law quickly. We made that commitment to the New Zealand electorate. Today we have heard speeches from the other side of the House saying that there is no regulatory statement or that the bill is not going to a select committee. But we made it clear to the electorate that we had a 100-day agenda. There is no confusion out there among the public about that. We told them on countless occasions in every newspaper in the country—except for the Melbourne 
 Age  
newspaper which was where as my leader pointed out the other day many members of the Labour Party were flicking around in the underground and trying to dig up dirt on our leader. No it was not in the headlines of that paper so they probably missed it. But our 100-day agenda was in the  
Dominion Post 
 and the  
New Zealand Herald 
 and 
in 
just about every major daily so Kiwis knew we had a big agenda and they are proud to see a Government standing up there now and delivering on that agenda. I think it is absolutely fantastic; I am proud of that and it is great to see us taking this forward. 
I will also talk about the repeal of the research and development tax credit which is a tough decision we had to make when we laid out our tax cut agenda. We knew that that would cost some money and we had to make some hard calls going into the election. Again we stood on the platform and said that these were the things we would address. When Labour rolled out their one or two policies that had any innovation at the election there was no costing around those. There was no “Oh we’ll actually change this and pull that back.”. There was absolutely no costing whatsoever above the pre-election fiscal update; it was an absolute joke. 
Anyway I will focus on the tax changes we are talking about and look at the provisions of the bill. As members have heard there are reductions to personal tax rates and particularly to thresholds. As I said earlier the hard workers of our community—the social workers the teachers the wharfies—who have got into higher and higher tax brackets will actually have those thresholds brought backwards. That will not increase tax. I do not know what papers the Government is looking at but if we look at tables for 1 April 2009 we see that that middle-income tax threshold is coming back to $48000 so people will pay only 21c in the dollar on an income of under $48000. By 1 April 2010 that threshold will increase to $50000 so again we are focusing on those in that middle-income bracket and they will still pay only 21c in the dollar. Then from 1 April 2011 the rate for that threshold will actually move down to 20 percent. 
Moana Mackey 
: Why are you putting taxes up for poor people? 
CHRIS TREMAIN 
: So I say to Moana Mackey that everybody benefits from that: if they are earning anything between $14000 and $50000 they will benefit from a reduction from 21 percent to 20 percent. I ask Moana Mackey to tell me how they would not benefit from that. How would they not benefit from that? That is a reduction from 21 percent to 20 percent. Those lower-income earners—we are not talking only about middle-income earners here; we are talking about lower-income earners—will benefit not only from the increase in the threshold level but also from the reduction of the rate from 21 percent to 20 percent. Hold on I will say that again: we are taking the tax level from 21 percent to 20 percent. 
Hon Phil Heatley 
: Is that up or down? 
CHRIS TREMAIN 
: Hold on—that is down! That is for a threshold of between $14000 and $50000. I would have thought that that covered a fair chunk of middle-income New Zealand and probably an even bigger chunk of lower-income New Zealand. I ask those members to tell me how people will not benefit from that. Oh it has all gone quiet over there now! This tax bill will actually deliver the changes we need and I think it is fantastic. The cuts will be delivered through the PAYE system which will be good for employees and if someone is an independent contractor that person will be able to have that delivered through his or her tax return at the end of the year. There will be no immediate changes to the tax rate structure that applies to portfolio investments but that will be addressed by 1 April 2010. 
I just want to talk about the independent earner tax credit. This tax credit really hits those battlers out there who have had no benefit from the Working for Families tax credits. There are 600000 people who qualify for this—600000 of the hardest-working New Zealanders who go out there day in day out paying tax and allowing our Government to make tough decisions about how we allocate that money. Let us understand that it is not our money; it is theirs and 600000 Kiwis have totally missed out on that. They have been part of threshold rises the whole way and they have just been taxed and taxed more and more. It is time we were dealing with that through the independent earner tax credit which will ensure that we start to deliver—and I say “start” to deliver—some rebate back to those middle-income earners. So from next year the credit will be worth $10 a week rising to $15 per week from 2010. It will be abated at 13c for every dollar of income earned over $44000 and as I have said 630000 people will qualify. Again I ask how that is not addressing a big chunk of the electorate. That 630000 is a huge proportion of our workforce being addressed. They have not had even one iota of tax reduction in 9 long years. 
I think this bill is a massive step in the right direction. We have gone out to the electorate and told them that we will deliver tax cuts and here we are within 32 days out there actually doing that—delivering on our promises building trust and delivering on what John Key said he would do. This is a good bill and in the second reading I recommend it to the House. Thank you.