Nash Stuart: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
Nash Stuart: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
[Volume:672;Page:18943] 
STUART NASH (Labour) 
: 
 It is very kind of Craig Foss to be concerned about my career. He said that he is concerned about my career but I say to Mr Foss that he should perhaps worry about his own career. With that sort of attitude Mr Foss’s chances of holding the Tukituki electorate have just diminished let alone his chances of sitting in the same chair that the Minister of Revenue is sitting in at the moment. Mr Foss unfortunately may never realise his ambition of being a Cabinet Minister because with this sort of Budget with that sort of speech and with that sort of attitude I do not think that this Government has much longer to go. 
Mr Foss asked what Labour’s obsession was about raising taxes. I would turn that round: what is that Government’s obsession with cutting taxes for those who do not really need it? We are talking about Part 1 “Annual rates of income tax for 2011-12 tax year” and these are the very same tax rates for someone on a million dollars. The Inland Revenue Department told me that 650 New Zealanders had a declarable income of a million dollars. If a taxpayer earned a million dollars then that person last year received a tax cut of a thousand dollars a week—a thousand dollars a week—extra in the hand. A person on the median wage in Napier received about $5 a week extra. 
Mr Foss and other Government members have trumpeted the fact that 72 percent of New Zealanders are on one of our two lowest tax rates. But I have to ask whether it is really a fact to trumpet that we are such a low-wage economy that the vast majority of our taxpayers are on a low tax rate. I actually do not think that it is anything to be proud of at all. In fact I think that the fact that so many of our workers are on such a low rate of tax is quite shameful. Goodness me; I would have thought the aim of any Government was to drive wages up because through increased productivity increased wages and increased growth the economy would grow and people would be better off. But no; it is apparently a point of competitive advantage when we have a low-wage economy. 
Pete Hodgson nailed a further point and it was confirmed by John Hayes. Pete Hodgson said that he is better off under these tax cuts—under the rates we are debating in clause 3. But do members know what John Hayes said? He told Mr Hodgson to put the money in KiwiSaver or save it. Do members know the problem we have? The problem we have at the moment is that the tax cuts that were implemented last year the rates we are debating in clause 3 at the moment have had absolutely no positive effect on this economy. This is “Keynesian Economics 101”. It says that if tax cuts are given to the very wealthy in times of recession the very wealthy will save the money from those cuts; they will not spend it. But if tax cuts are given to those who really need it those who are really struggling then those people will spend the money from those cuts and that will help to drive economic growth in this country which is what we need at the moment. That is what we need—economic growth. We need incomes to rise and we need people to be spending money in this economy which is one of the problems we have with the cuts to KiwiSaver and the cuts to Working for Families. In Napier and in Hawke’s Bay Working for Families pumps about $120 million into the local economy. If we take that money out of the local economy it will have a huge impact on the people of Napier and a huge impact on the people of Hawke’s Bay. 
I would like Mr Dunne to take a call and I would like Mr Dunne to chastise the first speaker of the day Michael Woodhouse because Mr Woodhouse said he would trust the figures from Deloitte much more than he would trust my figures. Do members know where my figures came from? They came from the Inland Revenue Department. They came from that Minister’s department. I tell members I have much more faith in the figures provided by the Inland Revenue Department than I do in the figures provided by Deloitte. In the Finance and Expenditure Committee we hear a lot from the Inland Revenue Department because a lot of tax laws go through that committee and my experience of the Inland Revenue Department is that it does a very good job. The figures that the Inland Revenue Department provides are first class. The advice that the Inland Revenue Department gives is normally very very robust and very very sound. In fact I think the Minister presides over what I would say is one of the better ministries—one of the best ministries—of this Government. I congratulate the Inland Revenue Department and that is why I find it quite insulting that Michael Woodhouse would say that the figures from Deloitte are much better than the figures from the Inland Revenue Department. 
When I look at the figures from the Inland Revenue Department with regard to this Budget I have some grave concerns about the fundamental premise of the figures provided by Mr Key and Mr English yesterday. Why? There was a $4 billion discrepancy between the forecast from the Inland Revenue Department and the forecast from Treasury on which this Budget is based—a $4 billion discrepancy. As I said my dealings with the Inland Revenue Department through the Finance and Expenditure Committee have been very very good. I think it is a very professional organisation. In fact I was saying to the Minister the other day that of all the written questions I send to all ministries I think those from the Inland Revenue Department come back in the quickest time and provide the best data. So I ask why the Government would trust Treasury which has constantly got it wrong over the figures from the Inland Revenue Department. There is a grave concern when advice from the Government’s tax collectors is ignored. There is a grave concern there; of that there is no doubt. 
Mr Woodhouse and all the members on that side talk about Labour’s obsession with raising tax rates. They talk about our obsession with taxing the very wealthy. Well I say that our system is called a progressive tax system. How a progressive tax system works is that those who can pay the most tend to carry a little bit more of the burden because they can. It is exactly the same sort of system that citizens have in Australia and exactly the same sort of system they have in the United Kingdom and in the United States. In fact every single OECD and developed country in the world has a progressive tax system. As Pete Hodgson said our top tax rate is one of the lowest in the OECD; it is one of the lowest in the world. In fact Australia’s top tax rate is 45 percent and ours is 33 percent. The Australians have not given $1000 a week to someone who earns a million dollars; I think that is actually quite reprehensible. When John Key was asked about it he gave that classic very wealthy man’s response: “Well I earn so much so why should I have to pay so much?”. We asked him to pay only 39 percent; that is all he was paying. He was still getting 61 percent of everything he earned in his back pocket. Goodness me! Was 39 percent too much to ask? 
David Bennett 
: Is that what you want—61 percent? Can we quote you on it? 
STUART NASH 
: It is called a progressive tax system I tell Mr Bennett and it is the foundation of our tax system. 
But I must admit that when I read this Budget I wondered whether the Government was going to put up the business tax rate. The Fiscal Strategy Report on page 55 of the Budget documents states that the tax policy will be “consistent with a broad-base low-rate tax system that raises revenue in the most efficient manner to support the medium-term goal of reducing and aligning personal trust and company tax rates at a maximum rate of 30%”. Is the Government planning on raising the tax rate? One thing that Mr Cunliffe said was that Labour would not raise the company tax rate. Yet the Government’s Budget document says that it is planning to raise the company tax rate to 30 percent. I ask Mr Dunne whether there will be an announcement on that. Could the Minister perhaps stand up and say whether there is a plan to raise the company tax rate to 30 percent as it says in the Fiscal Strategy Report on page 55 of the Budget documents. If the Government is going to do that then I think businesses in New Zealand deserve to know. I must admit that if we look at the commentary from business on this Budget we see that the sector has come out very strongly against this Budget. In fact business has said that this is not a Budget that will promote growth and it is not a Budget that will promote efficiency. In fact Matthew Hooton—and we could hardly call him left-wing—