Tremain Chris: Income Tax Bill — Third Reading 
Tremain Chris: Income Tax Bill — Third Reading 
[Volume:643;Page:12747] 
CHRIS TREMAIN (National—Napier) 
: 
 Mr Woolerton does himself a disservice in terms of his acknowledgment of his contribution to the Income Tax Bill. He like other members of the Finance and Expenditure Committee did pay strong attention to the detail of the bill. I agree that all of us did not read through every page of the 2704 pages that comprise the bill but we certainly paid due consideration to the anomalies that were raised by the submitters on the bill and by the officials. I think Mr Woolerton—like all members—paid due heed to those anomalies in consideration of the bill. Today I join with him in supporting this motion going forward. 
Before discussing some of the detail of the bill I will take just a minute to acknowledge the work of David McGee. As a new member of this House I want to put on record the enormous support he has provided to new members. He has been an extremely approachable man and is extremely knowledgable. He has been highly supportive of new members of the House in all aspects. I want that to be put on record. 
The Income Tax Bill marks the final chapter in a project that began back in 1992. I do not want to spend a lot of time on that as Ministers Cullen and Dunne have canvassed the issue. It was commenced back in 1992 with Wyatt Creech who was the then Minister of Revenue. It began in 1992 with the Valabh committee which recommended that the structure of the Income Tax Act be simplified made easier and refined and that it should be rewritten in plain language. That has been the whole objective of this particular bill. Seventeen years later we stand to debate the final stages of what has been a truly mammoth bill. Members of the gallery might want to have a look down on the table at the size of the legislation we are debating here today. My congratulations go to Sir Ivor Richardson and to the officials for undertaking this behemoth—this huge review of the tax legislation. I say well done to those people; they should take a bow. 
The purpose of the bill is to make the legislation easier to understand. On behalf of accountants in the Hawke’s Bay and in Napier and of friends in the accounting fraternity—the likes of Andrew Bayley Tony Mossman and Giles Pearson who are simply salivating over this new legislation and its simplification and over what that has done for them in their particular roles—I tell members that the fact that it is in plain language will be a big help for them. Its language is clearer and more concise. The writers of the bill have managed to get rid of a lot of the legal or archaic terms that have been associated with the historical legislation. It has been consolidated with far greater clarity and a heap of repetition has been cut down. 
In terms of the bill’s style the changes are significant but its overall intention remains exactly the same. That intention is the framework that holds together the policies of progressive Governments on the way New Zealanders are taxed. Under this Labour Government new records have been set in the policy in terms of the levels of taxation that hard-working Kiwis are now being asked to pay. My able colleague Dr Lockwood Smith referred to the rapacious—I think that was the word he used—ability of Dr Cullen to collect tax. We need only look at the statement of financial performance of the House in 2007 to see that the total revenue levied through the Crown sovereign power is some $56 billion—$56 billion is being levied by the Crown right now. We have only to go back to the same financial statements on 30 June 2000 to see that the level of tax that this Government was taking from hard-working Kiwis was $34 billion. We have seen an increase of $22.1 billion in the space of 6 or 7 years. It is unbelievable. That is a whopping $5525 of additional tax per man woman and child in this country collected over just that short period. That is a 64 percent increase in direct taxation of this country. It is huge. 
Under this Government there is unlikely to be change any time soon. This Government—in the Prime Minister’s words—is intent on building up the kitty. It is building up the kitty for this Government to fight in the next election. I have the proof. It is good that Minister Cunliffe is in the Chamber today because he will be able to verify the proof of this building up of the kitty. I would like to refer him to the Cabinet paper from Michael Cullen’s report dated 19 April of this year. I specifically refer him to point 23 of that Cabinet paper. It states: “To maintain our commitment to the long-term fiscal objectives” which is Cullen-speak for building up the kitty “I may need to make some adjustments to future Budgets. These are likely to be:”—members should listen for it—“… that we do not adjust tax thresholds in the medium term thereby retaining fiscal drag and potentially allowing tax to GDP ratios to rise slightly.” 
Chris Auchinvole 
: Which means? 
CHRIS TREMAIN 
: I will get to it. The members of the gallery and public probably have no idea what it means. I will certainly explain it. The paper states: “Accordingly this paper seeks Cabinet’s agreement”—which the Cabinet signed off on; I am sure Minister Cunliffe will agree with that—“to rescind our previous decision to adjust income tax thresholds … Within the projection period (i.e. from 2011/12 onwards) we will adjust tax thresholds for inflation but some portion of fiscal drag might need to be retained to finance our decisions.” 
Let us ponder some of those statements for a minute or two. Firstly the report states that the Government will not adjust the tax thresholds. That means that as one’s income goes up one will be taxed at higher levels of taxation. One will simply fall into higher marginal tax brackets so will be taxed more. Secondly the report states that in the medium term the Government will not adjust anything. Medium term tends to be 5 to 15 years so we are looking at a Government that will not do anything for our taxation in the medium term. It is in this Cabinet paper. The Government will retain fiscal drag. It will actually allow hard-working Kiwis to end up in higher tax brackets paying more tax on their earnings. What is more the Government acknowledges that it will allow the tax to GDP ratio to rise. That means that going forward it is prepared to collect a higher amount of tax over the whole national income. 
The Government is acknowledging that it is not prepared despite this massive tax take to give any back to hard-working Kiwis. 
Chris Auchinvole 
: Is Dr Cullen a historian? 
CHRIS TREMAIN 
: Yes. So how can hard-working Kiwis trust this Government when its members now stand up and say they might think about tax cuts at the next Budget but in this Cabinet paper signed off by the Minister across the House there Cabinet says it is not going to adjust tax thresholds in the medium term it is going to retain fiscal drag and it is going to allow tax to GDP ratios to rise? That is what they are saying and they say it in this Cabinet paper. So the talk we get over there about maybe having a look at tax cuts in the next Budget does not stand up to muster because the truth is in this Cabinet paper signed off in April 2007. I want Kiwis to have a good long think about that. 
In summary we are here debating this Income Tax Bill tonight. It has been a mammoth piece of work. It sets the foundations for the wider tax structure—the framework within which policies of Government around tax are set. But Mr Assistant Speaker I have to tell you that the way this current Government is taxing hard-working Kiwis it is no wonder that more and more Kiwis are leaving this country going overseas and seeking careers in other countries. Thank you Mr Assistant Speaker.