Cunliffe David: Questions for Oral Answer — Questions to Ministers 
Cunliffe David: Questions for Oral Answer — Questions to Ministers 
[Volume:660;Page:8731] 
6. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: What advice if any has he received outlining the effect of an increase in GST on families? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The advice is that the way an increase in GST impacts on families and other taxpayers depends entirely on what other tax changes accompany it. 
Hon David Cunliffe 
: Does the Government currently have a Budget deficit and is the Government planning to increase GST—yes or no? 
Hon BILL ENGLISH 
: It may be news to that member—in fact I think it is news to that member—that the Government has a Budget deficit. We are not raising GST to close that deficit now and that is what the Prime Minister stated before the election. 
Hon David Cunliffe 
: I think it might be news to the Prime Minister— 
Mr SPEAKER 
: Just ask the question. 
Hon David Cunliffe 
: Can the Minister confirm that he told the  
Dominion Post 
 in response to a question about whether he would support raising GST or imposing any kind of capital gains tax: “We won’t be doing that … It is not our policy”? 
Hon BILL ENGLISH 
: I can confirm that. I can also confirm that the following descriptions were given just 6 months ago: “His initial plan was right. The things we did on Family Support accompanying GST as a way of cutting down your huge tax rates …”. That was Phil Goff just 6 months ago referring to the plans he was part of back in 1989. 
Mr SPEAKER 
: Order! 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: I am on my feet and there will be silence. Forgive me my attention was a little divided but I thought I heard the member’s question and I am not sure the answer bore a lot of relationship to the question. I think the only fair thing I can do is invite the member to repeat his supplementary question. 
Hon David Cunliffe 
: I am happy to ask a different one. 
Mr SPEAKER 
: No I invite him to repeat it. 
Hon David Cunliffe 
: Then I will repeat that question. Can the Minister confirm that he told the  
Dominion Post 
 in response to a question about whether the Government would be raising GST and imposing any kind of capital gains tax: “We won’t be doing that … It is not our policy”? 
Hon BILL ENGLISH 
: I will give the same answer that I gave before which was: “I can confirm that.” I also add if I am allowed to that the previous Government left the economy in such a mess that we have had to set out to design a tax package that will increase our economic performance. 
Amy Adams 
: Under what conditions might GST be increased? 
Hon BILL ENGLISH 
: We have not considered increasing GST for the purposes of closing the Government’s deficit which is a very large one. The Government has been looking to increase New Zealand’s long-term economic performance because after 10 years of mismanagement we have a lopsided economy where the incentives to invest and save are weak and we have had too much consumption and borrowing as illustrated by the fact that New Zealand now owes the world around $160 billion. So we have proposed a package that bundles up GST income tax rate changes and changes to the taxation of property as a way of improving the tax system and our economic growth prospects. 
Hon David Cunliffe 
: Sorry seems to be the hardest word to say. How can— 
Mr SPEAKER 
: The member will just ask his supplementary question without adding any— 
Hon David Cunliffe 
: Respectfully a reprise deserves a reprise and it was not me that started reprising. 
Mr SPEAKER 
: The member will not now argue with the Speaker. I invite him to ask his supplementary question and to do just that. 
Hon David Cunliffe 
: How can the Minister say that Kiwis will be better off after a hike in GST when low and middle income earners will at best be compensated for their increased costs? How does he expect those hard-working Kiwis to get ahead? 
Hon BILL ENGLISH 
: The member will just have to wait and see. I know it is disappointing for him that the Prime Minister stated yesterday that lower-income New Zealanders particularly on benefits and superannuation will be compensated for any increase in GST. That is technically not difficult and it is a policy objective of the Government if it decides to increase GST. 
Hon David Cunliffe 
: Can he therefore guarantee that hard-working Kiwis earning $70000 and below will be much better off in the tax package or is his version of fairness that the Prime Minister gets a $500-a-week tax cut the average wage earner gets 35c a week and the minimum wage earner gets nothing? 
Hon BILL ENGLISH 
: No. 
Dr Russel Norman 
: Does the Minister agree that whether one looks at it from the criteria of fairness and progressivity of broadening the tax base or of the size of the revenue actually raised on all those criteria a capital gains tax excluding the family home comes out way ahead of GST? 
Hon BILL ENGLISH 
: As we discussed this morning at the Finance and Expenditure Committee the Government has been looking at tax changes that might meet a number of criteria including simplicity of administration positive impact on the economy and fairness. In considering those changes in some detail the Prime Minister stated yesterday that a comprehensive capital gains tax along with some other options were put off the table. I note that the Tax Working Group which looked at this issue in some detail for 6 months could not agree on whether a comprehensive capital gains tax would work. 
Rahui Katene 
: What advice has he received about the benefits of introducing a 1 percent transaction tax—a flat tax for everything consumed whether it be a product service or financial transaction—and how would that tax impact on disposable incomes for families? 
Hon BILL ENGLISH 
: I have not received particular advice on a financial transactions tax although I know it has been discussed and dismissed a number of times over recent years. GST amounts to a flat tax on all consumption except for financial services housing rentals and interest and as such it is regarded around the world as a model of an effective tax. 
Rahui Katene 
: Is he aware of my bill the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill and does he support the Maori Party’s commitment to assisting those in low-income households to purchase healthy foods? 
Hon BILL ENGLISH 
: I am aware of the Maori Party’s bill and I am also aware of the Maori Party’s desire to participate in extensive discussion about a tax package. I might say this is an example where we need to be a bit careful about criteria. By some standards milk and bread do not meet the standards of healthy food. Some people are saying to us we should exempt milk and bread and others are saying we should exempt healthy foods which may be two different groups. By and large we favour GST staying as it is.