Boscawen John: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading In Committee 
Boscawen John: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading In Committee 
[Volume:651;Page:125] 
JOHN BOSCAWEN (ACT) 
: 
 I thank the Deputy Speaker and I thank Mr Mallard— 
Hon Darren Hughes 
: The Labour Opposition is here to help. 
JOHN BOSCAWEN 
: I thank the Labour Opposition and I say long may it remain the Labour Opposition. I am proud to be part of the new National - ACT - Maori Party Government and to speak in support— 
Hon Members 
: Say it again! 
JOHN BOSCAWEN 
: I will say it again. I am proud to be part of the new National - Maori Party - ACT Government and to speak in support of the Taxation (Urgent Measures and Annual Rates) Bill. 
I will start by referring back to yesterday’s Speech from the Throne. I quote: “The driving goal of the new Government will be to grow the New Zealand economy in order to deliver greater prosperity security and opportunities to all New Zealanders.” The driving goal will be to grow the New Zealand economy in order to deliver greater prosperity security and opportunities for all New Zealanders and nothing is more fundamental to driving prosperity than a taxation system that encourages thrift enterprise and hard work. How appropriate it is that one of the first moves by the new National - ACT - Maori Party Government is the introduction of this tax bill which makes a number of significant changes to our taxation system. 
First of all the bill introduces a regime where by 1 April 2011 80 percent of taxpayers will be paying 20c or less in every dollar in tax. Secondly it introduces a reduction in the top marginal tax rate—initially from 39 percent to 38 percent and then to 37 percent. I say that that is the first step because I believe that the top marginal tax rate should be a lot lower than 37 percent. I thought it was very appropriate that the Hon Michael Cullen asked a question of the House a few minutes ago when he asked what the main attraction was of going to Australia. What is the main attraction of going to Australia? Let me tell Dr Cullen that the main attraction of going to Australia is the standard of living in Australia where net wages after tax are a full 25 percent higher than in New Zealand. 
What a contrast there has been between the first move of the National Government and the first move of the previous Labour Government. When the Labour Government first came to power in 1999 it moved to increase the top marginal tax rate from 33c in the dollar to 39c in the dollar. Since that time we have had the Labour Government’s 2001 McLeod Tax Review which recommended that the top marginal tax rate should drop back from 39c in the dollar to 33c in the dollar. Did the previous Labour Government listen to the advice of its own advisers on the McLeod Tax Review? No it did not. I say that this is the first move of the National Government in this area because we in the ACT Party believe that the top marginal tax rate should be a lot lower than 37c in the dollar. 
When Dr Cullen introduced the bill in 1999 to increase the top marginal tax rate he said that 95 percent of people would not be asked to pay more tax; instead only the top 5 percent of income earners would pay more. That has never been the case and over the last 9 years more and more New Zealanders have moved into the top income threshold of $60000. More and more New Zealanders have been penalised for working hard and making sacrifices in order to get on and improve their lives. They have been penalised for doing that with the “envy tax” of 39c in the dollar. That overtaxation has cost New Zealand families hundreds of millions of dollars. It has cost New Zealanders jobs growth and lost opportunities. Why is that the case? It is because the taxation system has sent a message to all New Zealanders that we do not recognise hard work. It tells them we do not recognise hard work thrift and enterprise. It says we want to have a regime in New Zealand that penalises people who want to study go into higher paying jobs work hard and try to provide a higher standard of living for their families. 
My colleague the Hon Sir Roger Douglas commented on Government expenditure in his speech to the House yesterday. He talked about how the rate of Government expenditure had increased over and above the rate of inflation by $18 billion over the term of the last Labour Government—by $1000 a month or $12000 a year per capita. In order to have lower taxes one has to first get Government expenditure under control. By allowing Government expenditure to grow by more than the rate of inflation on a per capita basis Labour has cost the average income earner in New Zealand over $12000 a year. 
I say to Mr Cullen—who asked what the main attraction was for people to go to Australia—that the main attraction is for people to enjoy a higher standard of living with a top marginal tax rate that does not cut well into incomes in excess of $100000. What has the regime been under Mr Cullen’s Government? It has been a top marginal tax rate of 39c in the dollar on income over $60000 a year. 
The ACT Party as the party that encourages individual responsibility enterprise and thrift has always opposed Labour’s tax hikes. ACT has been the only party in this House that has been consistent in its approach to tax. We have advocated tax cuts since the party’s inception in the mid-1990s. 
Hon Darren Hughes 
: Why is the member voting for increases? 
JOHN BOSCAWEN 
: I am voting for a reduction in the top marginal tax rate from 39c in the dollar to 37c in the dollar and I am saying that it is far too high at 37c in the dollar. I say to the member that if his Government had managed to control Government expenditure and keep increases to the rate of inflation the average New Zealander on the average income in this country would be $1000 a month or $12000 a year better off. I campaigned at the last election on a policy that would hold increases in Government expenditure going forward from 2009 at no more than the rate of inflation. We are five MPs and by 2011 we expect to be a lot more than five MPS. Our forecasts show that if we can maintain increases in Government expenditure at a rate of no more than the rate of inflation by 2018 we can have a flat marginal tax rate of 20c in the dollar. 
In 2005 the Labour Party had the opportunity to reduce the tax burden on hard-working New Zealanders. If the Labour Government had implemented the tax rates that the ACT Party suggested at that time the previous Government could have added 1 to 1.5 percent growth in the economy which would have put New Zealand in a much better position to cope with the recession that we are now in. We have now led the OECD countries into the recession. 
This bill talks about tax rates changes to KiwiSaver and a number of other tax-related issues. Let us talk about KiwiSaver. 
Hon Darren Hughes 
: Yeah let’s— 
JOHN BOSCAWEN 
: Let’s talk about KiwiSaver and let us talk about the people that you purport to represent. 
Mr DEPUTY SPEAKER 
: The member cannot use the word “you”. That word brings the Speaker into the debate. 
JOHN BOSCAWEN 
: I am sorry Mr Deputy Speaker. We have 800000 people enrolled with KiwiSaver and without doubt KiwiSaver has been a tremendous success—far in excess of what the Labour Government expected. But we have to look at who those 800000 people are. Are they ordinary working men and women on the average ordinary wage? Can those people afford 4 percent or are they people who have been attracted by the massive incentives and particularly parents who have encouraged their children—and infant children in some instances—to take advantage of the very generous incentives? As the Hon Bill English said when introducing this bill the recession is now upon us and we have reached the stage where we can no longer afford those incentives. 
If we are to improve the livelihoods and living standards of ordinary New Zealanders we have to increase productivity in this country. There is more to it than reducing taxes. There is more to it than the changes to the KiwiSaver scheme. There is a need to reform the Resource Management Act. There is a need to build infrastructure. There is a need to improve the roading system and to complete the roading system in Auckland. 
Thank you for the opportunity to speak. I say the ACT Party will be supporting this bill.