Cunliffe David: Taxation (Urgent Measures and Annual Rates) Bill — In Committee 
Cunliffe David: Taxation (Urgent Measures and Annual Rates) Bill — In Committee 
[Volume:651;Page:181] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I will restrict my comments to one brief call on this very specific clause. It sets the rates for the 2009-10 tax year and as such it brings us to the heart of a point formerly made by the Minister of Finance. His suggestion was that nobody would be worse off because the progressive tax reductions that had been put in place by the previous Government had not been implemented yet. Well if that were the case there would be no need for this part which changes the tax rates for the coming year. This particular clause is necessary because Labour’s proposed rate reductions are already part of our law. 
That takes us to why significant proportions of the New Zealand public will in fact lose. Before I return to the specifics of the mechanisms that mean that many New Zealanders will lose let me clarify a very important prior point and that is the difference between the average-income earner and the median-income earner. We know that the “average” income is $45000. It is very interesting that in my electorate of New Lynn 66 percent of all taxpayers earn less than $40000—earn significantly less than the average income. Two-thirds of people on less than the average wage? What is that about? It is because the average is skewed by a small number of very high earners who drag the average above the median. So when we say that the average-income earner gets $1.92 out of the National Government’s tax reduction and anyone on below $44000 with children gets nothing or loses we are actually saying that two-thirds of all taxpayers in my electorate of New Lynn are either not affected or worse off and only one-third gains. In Mr Tremain’s electorate of Napier 71 percent of all taxpayers earn less than $40000 so 71 percent of his taxpaying constituents—if they have children—potentially are worse off as a result of this tax change. Why is that? When we get into the mechanics of the bill— 
Hon Steve Chadwick 
: Is that “nobody”? 
Hon DAVID CUNLIFFE 
: That is nobody who will be voting for Mr Tremain next time. 
This issue is of particular importance to the Maori Party. The Maori Party is supporting this bill. If two-thirds or more of all taxpayers across the country earn less than the average income and therefore are going to be losers under this bill—if they have children—imagine the implications for Maori communities whose incomes are skewed below the mean. The vast majority of Maori New Zealanders will be hurt by this bill. We know as a start-off that most people who voted for Maori Party candidates gave Labour their party vote so this is a sensitive matter for the Maori party members anyway given that they have gone into coalition with National—all for two seats outside Cabinet. 
Hon Clayton Cosgrove 
: Mana-enhancing! 
Hon DAVID CUNLIFFE 
: Mana-enhancing for the individual Maori Party MP but not for the community. Those people will be asking their representatives why they have done this. Why have they inflicted upon them in the first business week of the House a tax increase? 
What is the mechanism? I see that Mr Tremain still does not understand. If one is on an income of between $14000 and $20000 by April 2011—following the period during which this clause applies—one would by law have been on a marginal tax rate of 12.5 percent under Labour; under National those people will be on a rate of 21 percent. That is a big difference. That is a big big difference. Merry Christmas to all of those people who thought that they were going to get a tax cut! 
Hon Clayton Cosgrove 
: They did not tell us that before the election! 
Hon DAVID CUNLIFFE 
: They did not tell us that before the election. I think this measure is a symbol of a much much deeper problem and of course it is a problem that the Maori Party will have to wrestle with and that is that National campaigned on the glossy idea that everybody would have everything that he or she would have had under Labour but with a few fresh faces to carry it forward. It was a very palatable suggestion. It fed into that old idea that it was time for a change—“But we actually quite like you guys so we do not want too much change.” Mr Key understood that and he campaigned on not making too much change. 
But the rhetoric did not match the reality. On the first business day of the House in comes a tax bill that gives a tax rate cut and a threshold lift to upper-income earners and of course—supported by the financial sector—penalises real businesses our innovators and exporters which lose their research and development tax credit and penalises low and middle income families the heartland of New Zealand. It disproportionately penalises Maori and Pacific Island New Zealanders. Good luck to Mrs Turia good luck to Dr Sharples and good luck to all the Maori Party MPs in their next round of hui as they explain what is in this bill for ordinary Maori people who will be paying more not less tax during the period to which clause 29 applies.