Prebble Richard: Questions for Oral Answer — Questions to Ministers 
Prebble Richard: Questions for Oral Answer — Questions to Ministers 
[Volume:617;Page:12631] 
8. Hon KEN SHIRLEY (Deputy Leader—ACT) 
 on behalf of  
Hon RICHARD PREBBLE (Leader—ACT)  
 to the  
Minister of Finance 
: If the Government was to adjust the income tax thresholds to take into account the movement in inflation since the thresholds were fixed what would the $38000 and the $60000 thresholds be adjusted to? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Based on a starting point of when the current thresholds came in on 1 April 2000 to 1 April 2004 $42900 and $66100 respectively. 
Hon Ken Shirley 
: Will the Minister then concede that Labour’s election promises contained in its glossy pamphlet headed “We will deliver” with the airbrushed photograph of the Prime Minister have now been broken—specifically “No rise in income tax for the 95 per cent of taxpayers earning under $60000”—and how many taxpayers now earn more than $60000? 
Mr SPEAKER 
: There are three questions there. The Minister can answer two of them. 
Hon Dr MICHAEL CULLEN 
: No because indeed people’s incomes have increased under the Labour Government. The effect of any change on those people earning over $42900 up to $60000-odd would be $11.31 a week and on those earning above $60100 $18.35 a week. That would be the amount—the $11-odd—that the couple on the front page of the  
Sunday Star-Times 
 would have got from indexation. Under the Government’s Budget package they will receive many times that amount of support. 
Janet Mackey 
: Has the Minister received any advice on the cost and advisability of inflation-adjusting the income tax scales; if so what did it say? 
Hon Dr MICHAEL CULLEN 
: Treasury and the Inland Revenue Department reported on the issue in March of last year and at that point the estimated cost was around $400 million—it will undoubtedly be considerably more now. They advised against indexation saying that given the complexities of changes to the tax scale and interactions with social policy it was better to make large changes occasionally taking account of all relevant factors rather than making frequent small changes. 
John Key 
: Does the Minister of Finance acknowledge that on top of the $450 million of additional revenue brought in by bracket creep his Government has increased the tax burden on all New Zealanders by more than $1 billion a year; if so why will he not give all New Zealanders some tax relief in the Budget? 
Hon Dr MICHAEL CULLEN 
: One of the reasons is that most of his colleagues keep calling them increases in Government spending at the same time. 
Dr Muriel Newman 
: In light of the fact that through overtaxing New Zealanders this Government is running a multibillion dollar surplus what is the Minister’s response to the editorial in the  
Sunday Star-Times  
stating that the reason working families in New Zealand are struggling is that they are paying too much tax? 
Hon Dr MICHAEL CULLEN 
: I will yet again attempt to explain the difference between an operating surplus and a cash surplus. Let me assure the member that when the Budget is presented she will find some projections of cash deficits but I do not intend to repeat some of my predecessors’ mistakes by borrowing large sums of money for current consumption so that future generations can live more poorly as they pay it off. 
Gordon Copeland 
: Is he prepared to look further at indexation of the tax brackets on the basis of fairness the resultant boost in family incomes and the above-forecast surplus this year in the Government’s accounts of some $740 million? 
Hon Dr MICHAEL CULLEN 
: I will take the last question first. The above-forecast surplus is because of the above-forecast growth. If one spends an extra surplus as soon as growth is higher than forecast one quickly ends up with what is called one-sided Keynesianism and that leads down a very long road of increasing debt.