Copeland Gordon: Taxation (Base Maintenance  and Miscellaneous Provisions) Bill Privacy Amendment Bill (No 3) — Third Readings 
Copeland Gordon: Taxation (Base Maintenance  and Miscellaneous Provisions) Bill Privacy Amendment Bill (No 3) — Third Readings 
[Volume:626;Page:21466] 
GORDON COPELAND (United Future) 
: 
 During the Committee stage of the original Taxation (Base Maintenance and Miscellaneous Provisions) Bill the Minister in the chair David Cunliffe took the call and challenged with some determination the statement he claimed I had made that the Labour Government had not reduced taxes. I say to the Minister—and I conceded this in my second reading speech—that there are some aspects to this legislation that will reduce the quantum of tax for some taxpayers but I put squarely to him that the net effect of this legislation is several hundred million dollars more of tax for the Government. The net effect of this legislation is not any reduction at all in tax for New Zealanders. We are to collect $360 million more under this legislation from the banks alone. 
When I think of the figure of $360 million it has a kind of familiar ring to it. One of the other members recognised straight away that 360 million bucks is exactly the amount of revenue the Government intends to return to New Zealand taxpayers on 1 April 2008 by adjusting the tax brackets by 6.12 percent—an adjustment that Dr Cullen says we could not afford until then. But in the legislation that we are to pass into law tonight we will collect 360 million bucks from the banks themselves. So where is the problem? Why is the Minister of Finance about the only person in New Zealand who does not realise that it is time for tax cuts and that we can afford them? It reminds me of the famous grandmother who watched all the troops marching past and said: “Isn’t it a shame? The only person marching in step is my grandson.” It is that kind of myopic vision. 
Also when the Minister David Cunliffe tried to claim that somehow or other this legislation was going to reduce taxes my mind went to an instance in this House a little while ago when the newest member of the House ACT member Kenneth Wang in his first question to the Minister of Finance asked him how many increases in tax he had undertaken since he had become the Minister in late 1999. The Minister responded that the figure was nine. The honourable Phil Heatley told the House tonight that it was actually somewhere between 24 and 32; as Phil Heatley is an honourable member I accept his word in that regard. Then in a supplementary question to the Minister Kenneth Wang asked how many rates of tax he had reduced since he had become Minister and there was a deafening silence from the Minister. I think that all of us in the House were just amazed that Kenneth Wang whether by luck or by skill had actually caught the Minister on the hop completely. That is the memory that New Zealanders will take into this year’s elections. 
Let us unbundle the logic of another comment that the Minister in the chair tried to make in the Committee stage. He said that if we reduced the company tax rate a considerable benefit arising from that would go to overseas investors in New Zealand companies. That is exactly the point. If we want to attract new investment into this country then we need to have a competitive corporate tax rate. We heard from the Hon Richard Prebble that in some Eastern European countries those rates are down to 16 percent. 
Hon Richard Prebble 
: Russia’s down to 12. 
GORDON COPELAND 
: Russia’s is down to 12 percent. Ireland has had a very very low rate; I am not sure where it is now—I think it may have gone up a bit—but it was down to about 12 percent at one stage too. That is the whole point. 
There is a kind of—and I hate to use the word—inconsistency a logical inconsistency in that two bills down from this legislation in the urgency motion is the Overseas Investment Bill. With that bill the Government wants to encourage overseas investment in New Zealand. How does that square with it wanting to do exactly the opposite when it comes to the corporate tax rate? 
I want to reinforce also a point made by again Kenneth Wang—that is the great majority of companies in this country actually employ five or fewer people. As he said about 97 percent of them employ fewer than 20 people. We are talking about tax relief for all those companies so why do we get fixated about a little bit of leakage going offshore when the money potentially coming back the other way would be far greater? Even the leader of the Progressive Party recognises that reality. Even his party is saying that the corporate tax rate should come down to 30c in the dollar. In a way I think we relish taking this issue into this year’s election. 
I want to add just one other piece of information. Pansy Wong said she had a new piece of information. I have a new piece of information for the House as well. Today at the Finance and Expenditure Committee meeting John Key asked Dr Cullen whether he might have second thoughts about waiting until 2008 for the 6.12 percent adjustment to the tax brackets. I thought I knew where John Key was coming from—that he was thinking to himself that a couple of weeks from the election date Dr Cullen might suddenly say to the nation: “Hey guys I got it wrong and yep we’ll do it after all and we’ll do it from maybe 1 April 2006.” But no he got a categorical response from Dr Michael Cullen: “No I am not going to change. You’re going to have to wait until 2008.” So there it is. It is on the record. It is straight. It is clear. If nothing else New Zealand voters will have some pretty clear choices to make in this year’s election.