Henare Tau: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeHenare Tau: Questions for Oral Answer — Questions to Ministers[Sitting date: 28 May 2014. Volume:699;Page:18387. Text is incorporated into the Bound Volume.]2.Hon TAU HENARE (National) to theMinister of Finance: Over the past six Budgets has the Government made the tax system fairer for households and businesses; if so how?Hon BILL ENGLISH (Minister of Finance): It is a very good question from a longstanding and insightful member. Yes the Government has made changes to ensure the tax system is fairer. They include raising the effective tax rate on property investment increasing funding for the Inland Revenue Department to target property speculators and others avoiding tax preventing people using investment losses to make themselves eligible for Working for Families and other Government support and bringing in stricter rules to ensure multinational companies contribute to their fair share of tax as well as reducing the incentives for higher-income people to avoid paying the statutory rate of tax. At the same time the Government has reduced income tax rates for all income groups including low and middle income New Zealanders. Almost three-quarters of taxpayers now face a top personal rate of 17.5c in the dollar or less.Hon Tau Henare: What changes has the Government made to income tax rates and other taxes to help families get ahead?Denis O’Rourke: None.Hon BILL ENGLISH: The member may not have noticed that there was a tax reform package in 2010. The effect of that was that after-tax incomes at all levels of taxable income were immediately increased by more than the increase in GST in 2010. Someone on the average annual wage at the time of around $50000 was about $15 a week better off and a family with two children on the average household income of $76000 was about $25 a week better off. Two-thirds of the cost of the income tax in 2010 went into reducing the bottom two tax rates so someone earning $48000 a year now has a top tax rate of 17.5c in the dollar.Hon Tau Henare: How does the income tax system interact with income support provided to lower and middle income families and how does this redistribute income to those most in need?Hon BILL ENGLISH: Well the Government maintains a significantly redistributive tax and income support system. At any particular time a large number of households effectively do not pay income tax because the amount they pay in income tax is exceeded by the amount they receive from welfare benefits Working for Families paid parental leave and accommodation subsidies. The Government believes that this is entirely appropriate for families who are in need but it also recognises that we must help as many New Zealanders as possible off benefits and into work where they get the benefit of these income support measures.Hon Tau Henare: How significantly do the income tax and income support systems redistribute incomes for New Zealand households?Hon BILL ENGLISH: The most recent estimates show that households earning over $150000—that is the top 15 percent of households—will pay 49 percent of income tax. But taking into account all income support these 15 percent of households will actually pay 74 percent of net income tax. By contrast households earning under $60000 a year which is just about half of all households are expected to pay 9 percent of income tax. But taking into account all of the income support they receive what they are expected to pay this year will be more than offset by the $7.3 billion they receive in income support compared with $2.5 billion of income tax. That is households earning under $60000 are net recipients of about $5.8 billion.