Hon PETER DUNNE (Minister of Revenue) Link to this
I move, That the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill be now read a first time. I shall be recommending later that the bill be referred to the Finance and Expenditure Committee for consideration. The central feature of the bill is a wide-ranging reform of the taxation of income from share investments, whether through New Zealand - based managed funds or direct investment. To understand the reform it is necessary to look at the wider picture of how that investment income is taxed now, and what is wrong with the way it is being taxed now.
To look at only a part of the picture, or at a small corner of that picture, is to miss the rationale of the shape and the sense of the reform. The current tax rules on share investment operate very unevenly. They overtax some investors—they favour direct investment by individuals over investment through funds, and they favour investment in some countries over investment in others. What the bill does is place the tax treatment of different types of share investment on an equal footing to introduce greater fairness into the rules and to reduce the distortions they create. From next year, people who invest in New Zealand - based managed funds will see greater fairness in the way their investment income is taxed. The new rules will remove several tax disadvantages for people investing through managed funds, many of whom are ordinary middle-income savers. And with the expected introduction of KiwiSaver from next year, many more will be joining their ranks.
One of the key improvements in the taxation of income from New Zealand - based managed funds is that lower-income investors whose investment income is currently overtaxed at 33 percent will now be taxed at their correct rate. Those whose tax rate is 39 percent will continue to have their savings through funds taxed at 33 percent. The other key improvement is that capital gains on New Zealand and Australian shares held via a New Zealand - based managed fund will no longer be taxed. This will increase the gains for people who invest in this way and put them on an equal tax footing with direct investors into New Zealand and Australian shares.
The current tax rules on offshore investment and shares are riddled with inconsistencies, with the result that some investors pay less tax than others who have similar investments. Under the current rules, individuals who invest in shares and companies based in one of eight so-called “grey list” countries, such as the United States or the United Kingdom, pay little or no tax in New Zealand on their investment income. The simple reason is that companies in those countries usually pay low or no dividends on which those investors can be taxed. On the other hand, the same investment made through a New Zealand - managed fund will typically be taxed at 100 percent of realised capital gains. The proposed rules will generally align the tax treatment of “grey list” investment done directly and through managed funds.
Another huge inconsistency in the way offshore share investments are currently taxed is that direct investors in shares in companies in the remaining countries, such as Singapore, India, Korea, and even China, have a much higher tax burden. They must pay tax in New Zealand on 100 percent of the increase in the value of their shares each year. That group of direct investors will be better off under the new rules because unless their dividends are higher they, together with all the other direct investors in offshore shares, will pay tax on 5 percent of the opening value of their shares in most years, limited to 85 percent of any gain they make.
Most individuals who hold overseas shares outside Australia will not be affected by these changes, because those whose shares cost less than $50,000 will be exempted. That threshold of $50,000 for each individual obviously means that a couple could easily hold between them shares costing up to $100,000 without being affected. However, direct investors with share portfolios above the threshold in countries that are favoured by the current tax rules will be affected.
The proposed changes to the taxation of investment in offshore shares have a clear policy basis. If people live in New Zealand they are expected to contribute to New Zealand by paying tax here on their income, wherever it comes from. That principle should apply to all, regardless of the country they invest into. Investments in Australian resident listed companies will continue to be taxed as at present, which is mainly on dividends because they pay out a high proportion of their earnings as dividends—that being encouraged by both the Australian and the New Zealand tax systems. There is also the factor of the closer economic relationship between Australia and New Zealand, as well as the move towards a single market for the purposes of investment.
Recent weeks have seen a lot of misinformation about the proposed changes being directed at people who hold overseas shares, resulting in a lot of ill-founded concern on the part of people who in many cases will not be adversely affected by the changes in the bill. To allay that concern I announced last week that I would bring an amendment to this bill that would grant a 5-year holiday from the new rules for overseas portfolio investments and shares in certain types of widely held foreign companies that have a substantial New Zealand shareholder base. That holiday is intended to give those companies time to consider shifting their headquarters to New Zealand, which would bring considerable benefits to New Zealand, and time for the Government to complete its review of the controlled foreign company rules. The amendment will be effected by a Supplementary Order Paper to this bill.
The reform of the tax rules is very complex because it deals with a very wide and complex area of investment activity that historically has been covered by complex tax rules. For this reason I ask members to consider the proposed reform in its entirety, keeping in mind that it is aimed at achieving a coherent and balanced tax treatment of New Zealanders’ investment income. These new rules have been developed after a lengthy consultation process, from the release of the discussion document nearly a year ago, and the over 800 submissions it attracted, through to more consultation earlier this year before decisions were made. The Finance and Expenditure Committee will now have the opportunity to hear evidence on the proposals and to recommend any changes it considers appropriate, and I will await its deliberations with interest.
The bill also makes important amendments to the tax rules in several other areas. It introduces changes to ensure that employer superannuation contributions are taxed at about the right marginal tax rate for individual employees. These changes are designed to minimise the potential for taxpayers to use excessive salary sacrifice as a means of paying less tax. That practice involves reducing salary heavily, in exchange for corresponding increases in employer superannuation contributions, to take advantage of lower tax rates. Although the Government obviously wants to encourage people to save for retirement, excessive salary sacrifice merely to reduce income tax is unfair and against the policy intent of the law, which is to ensure fair taxation.
The bill also introduces changes to the foreign investment fund rules that will resolve tax compliance problems for people in New Zealand who have interests in Australian superannuation schemes. The changes will also remove disincentives for skilled people who have an interest in an Australian superannuation scheme to come to work in New Zealand on a long-term basis. The bill makes changes to the tax treatment of expenditure on geothermal wells, to remove uncertainty about the deductibility of capital losses arising from failed wells drilled in New Zealand. It will allow vendors of patent rights to spread income from sales evenly over 3 years, thus alleviating potential cash-flow problems that could constitute a barrier to investment in research and technology. A further change will assist the Inland Revenue Department in its investigation of tax evasion and avoidance schemes by allowing the department to remove documents for inspection. Finally, the bill sets the income tax rates to apply for the 2006-07 tax year.
These are some of the many changes introduced in this omnibus bill. They and the other proposed changes are described in detail in the separate commentary that has already been distributed to members of the House. I commend the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill to the House.
Dr the Hon LOCKWOOD SMITH (National—Rodney) Link to this
In speaking to the first reading of the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill, I have to say that it is typical Michael Cullen – Labour legislation. Sure, it eases the tax burden a bit in some areas, but then it clobbers in others. This Minister of Finance clearly cannot bear to give up much revenue. We all know, of course, that Dr Cullen thinks he knows far better than the New Zealand people how to spend their money. That is what gets right up the nose of middle-income New Zealanders about this Minister of Finance—he thinks he knows so much better.
Clearly, the bill does ease the tax burden for some. The tax position of those who invest through collective investment vehicles is improved by this bill. But those it clobbers are often those who have been prudent savers, have saved a bit of a nest egg, and have invested with a diversified investment portfolio, including direct investment in shares not just in New Zealand but in other countries with sound economies. That is the kind of investment that most advisers, including those on the Government’s own superannuation fund, would say is prudent and wise investment, yet this legislation will clobber those people.
Sure, there are winners with this bill. Those investors in what are now called portfolio investment entities—or “PIEs”, as this legislation calls them—will not be taxed on capital gains where they have invested in companies in New Zealand and Australia. Capital gains on those companies will not be taxed in this bill. Clearly, those investors will be winners, as will individual investors in portfolio investment entities, who will be taxed at the lower personal rate if they are lower-income earners. Those measures are both pluses, and National does not oppose them.
In fact, I guess we recognise that Dr Cullen has to introduce them, for his KiwiSaver proposal to work at all. Even if it were not for KiwiSaver sitting on the horizon, the measures not to tax New Zealanders’ capital gains on investments in collective investment entities in Australia and New Zealand, and to tax individual investors on their individual tax rates, make sense. But the problem is that the Government did not have to boot around other investors to make those changes. It could have made those rational changes without actually booting around prudent savers with direct foreign investment in shares in other sound economies around the world. The Government could have introduced these “PIE rules”, as they are called, yet kept the “grey list” countries. But, no, Dr Cullen wanted the revenue so he is just going to sock the rich a bit more and try to grab a bit more money off them. So everyone with more than $50,000 invested in shares in those “grey list” countries of the UK, the United States, Canada, Germany, Japan, Norway, or Spain will now have to pay tax on capital gains, whether or not they are realised, from 1 April next year.
The problem is that it is not just the rich that Dr Cullen is socking. If we look at what our Retirement Commissioner is saying on her website—I think it is the Sorted website—about the kinds of savings people need for their retirement, we see that someone earning less than $60,000 in New Zealand should, according to the Retirement Commissioner, have saved over $200,000 for their retirement. That is way above the $50,000 threshold that Dr Cullen is allowing for investors with this legislation before they get clobbered by a capital gains tax. Middle-income earners in New Zealand who are trying to save the kind of nest egg that the Retirement Commissioner says they should have for a secure retirement will be clobbered by this capital gains tax for daring to invest prudently, sensibly, and wisely in a range of economies around the world.
We have to ask ourselves why this Labour Government is hitting those sensible, middle-income, wise New Zealanders who are trying to save for their retirement. Dr Cullen says they are far too rich—he will make them pay a capital gains tax on unrealised capital gain, something that will hit a lot of retired folk very hard. Fifty-thousand dollars is not a lot of money to have saved. For anyone trying to have a better retirement, $50,000 saved and invested prudently around the world is not a lot of money. Yet Labour members, and, it seems, Peter Dunne, think such people are wealthy and will clobber them for daring to invest prudently around the world.
It is interesting that even investment advisers are saying that this is very unwise legislation. The general manager of Equity Investment Advisers and Sharebrokers Ltd, John Commins, said yesterday that prudent investors who have saved for their retirement and diversified their risk by investing offshore will be penalised. It is a shame that Dr Cullen thinks those kinds of investors should be taxed more.
National opposes this legislation for that reason, despite the fact that we support some of the measures around collective investment vehicles. We are supportive of the portfolio investment entities not being taxed on capital gains. We are supportive of the fact that lower-income investors can be taxed at their personal rates of income tax on investment in collective funds. But why will the Government clobber other wise investors at the same time as it is doing that?
Labour knows it is on shaky ground, because when this proposal was first put forward it was going to include investment in Australia in the capital gains tax. What happened is that the Government backed down on that one. Peter Dunne acknowledges it backed down on that. Of course, what happened then is that 28,000 shareholders in the Guinness Peat Group here in New Zealand said it was outrageous that they were going to be clobbered with a capital gains tax through investing in that company. What did Mr Cullen do? He backed down again and gave a 5-year exemption from the policy for those New Zealanders who have shares in the Guinness Peat Group. I do not say he was wrong to change the policy, but he should have changed it for everyone. Why did he just change the policy for investors in the Guinness Peat Group? I see Peter Dunne smiling. What or who twisted Dr Cullen’s arm on this? Was it all the emails the Prime Minister was getting? Was it one of the coalition members? Was it Winston Peters, who said to Dr Cullen that his support depended on that change being made? I would say there was a fair bit of murkiness in the background, because it is not a rational policy change to exempt just a selected group of shareholders. Dr Cullen should have allowed all the shareholders to be exempt from this change, because it is bad policy. It is anti-savings, and anti - prudent, diversified investment. In fact, it will probably strengthen the current bias in our investment towards property in New Zealand.
I note that Dr Cullen is about to speak next, and I will finish by saying this to him. This bill confirms the tax rates for this coming year. If he thinks a Government that is taking 92c in every dollar from the income earned by a woman who is looking after three children as she tries to get off the domestic purposes benefit is a Government that shows concern for people on a low income—one could almost say people in a poverty situation—then he disgusts me. He gave away hundreds of millions in his Budget to buy votes from higher - income earning New Zealanders—with up to $140,000 of income—and he crapped on those low-income people. He did not give them one cent of tax relief. For him to stand in this House a few minutes ago and claim he was doing a lot for people in poverty was outrageous.
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
Goodness me! Of course, the National Party policy was to lower that 92 percent rate to 90 percent, but also to take away the $10 a week of family support payments per child that were due on 1 April next year. So the vast majority of low-income families would have been significantly worse off under that proposal. It is good to hear the National Party oppose the first major tax cut of the new tax year. No doubt we will hear more about that as time goes on.
The reform to the taxation of share investment income and offshore income, as proposed in the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill, will introduce a much fairer set of rules for the taxing of income in New Zealand and offshore. As the Hon Peter Dunne said, the current rules are inconsistent, distortionary, out of date, and do not meet the purposes for which they were first introduced. They favour investment overseas into companies in eight countries over investment in companies in all other countries in the world, including the countries that are most rapidly growing at the present time and are likely to be the most rapidly growing over the next generation or so. They favour investment in companies in those eight countries over investment in companies in New Zealand, which does not make a great deal of sense. They favour direct investment by individuals over investment through managed funds, when most modest-income people save through managed funds rather than by individual investment. They discriminate even further when investing through funds, by favouring high-income investors over lower-income investors.
The reforms proposed in this bill take the system back towards achieving a reasonable balance between a very wide range of competing interests. The bill seeks a reasonable balance between those people who are at a disadvantage under the current rules and those who are favoured, often unintentionally, by the current rules. It was never the intention of the current rules that people would avoid paying income tax on their offshore income entirely, or almost entirely. It was assumed they would be taxed in the “grey list” countries; that is why the “grey list” was introduced. It was considered there was no need to tax in New Zealand, and that paying tax in the “grey list’ countries was easier than trying to offset the tax paid offshore against tax due in New Zealand. In practice, people have found offshore non-taxable vehicles, which, in effect, means they have found a way of avoiding tax entirely on their investment income.
We will therefore line up all those various elements. It will cost the Government something like $120 million a year in annual revenue loss to achieve that line-up. Overall, it represents a very significant tax cut for New Zealanders who invest here and overseas, and on New Zealanders’ investment income, which, sadly, one sees is not large when one looks at the total level of New Zealanders’ investment income. I understand that in managed funds the total average balance at maturity is something like $30,000. Most of the tax cut will come from tax forgone on investments while in managed funds. Overall, the offshore investment tax changes for all investors are approximately revenue neutral. Many of the winners will be the thousands of ordinary people who save through managed funds. Hundreds of thousands of people already invest through such funds, but that number is expected to increase significantly with the introduction of KiwiSaver, especially with regard to low and middle income savers who may not have access to a work-based savings scheme at the present time.
The reform of the tax laws is therefore crucial to developing a better savings culture—one that encourages people to start saving early in their working life for their retirement years. Many people tend to do nothing apart from paying off the house, leaving it far too late and far too close to their retirement before they try to save in addition for that. By then it is too late to accumulate any significant total capital. Now, it is too easy not to save. KiwiSaver will change that by introducing, effectively, an opt-out system rather than an opt-in system. With deductions at work by way of the employer, with the Inland Revenue Department managing much of the compliance costs and handling very small balances in order to remove those costs from the managed funds, and with the upfront and additional incentive in relation to saving for a house, the Government anticipates there will be a reasonably significant take-up of KiwiSaver. Indeed, the main objection now is that KiwiSaver should be augmented or turned into a compulsory savings scheme. But I note that New Zealand businesses do not want to contribute to a scheme like the one that operates in Australia, where businesses, rather than the individual employee, pay for the compulsory savings scheme.
We anticipate a lot more people will invest through managed funds, so it is important to remove the tax disadvantages that face people who save through those vehicles. One of the most obvious disadvantages is that there is a flat tax rate of 33 percent on the earnings in the fund, which overtaxes all those people who earn under $38,000 a year and whose marginal tax rate is 15c or 21c in the dollar. That overtaxation will cease under the proposed rules, and lower-income investors through funds that elect to be portfolio investment entities will be taxed at their correct rate. In order to ensure that there is no incentive for funds not to opt in, that taxation will be capped at 33 percent, so that there is no incentive to try to create separate vehicles for 39 percent taxpayers, or, indeed, not to have such vehicles at all. Those funds will no longer be taxed on their share gains from New Zealand and Australian companies. That is why the bill is timed to come into effect at the same time as KiwiSaver does.
That is one half of the job. The other half removes the tax advantages—we should be clear about this—enjoyed by some individuals who have offshore portfolio share investments, and ensures that direct investment is not tax favoured over investment through funds. In the past the National Party used to subscribe to the notion that taxation reform was not always just a matter of cutting taxes but also a matter of fairness and equity, and of achieving an appropriate balance around the taxation area. Now the National Party basically says in this House that it supports the continuation of tax avoidance schemes. It says it believes that it is perfectly right and proper that people should invest in tax avoidance entities offshore and avoid the taxes they would pay if they invested in entities within New Zealand, either directly or through managed funds. I do not know how National Party members can keep a straight face when they get up in this House and argue that, particularly when—
Hon Dr MICHAEL CULLEN Link to this
They try. Well, they put up Dr Lockwood Smith, who does not really try to keep a straight face, to be fair. But there is even a de minimis level of $50,000, so that those with smaller accumulated savings will not be affected by this measure.
The largest single group thus affected, investors in Guinness Peat Group, will be exempt for a period of 5 years, to allow that group to rearrange its affairs before registering in New Zealand. I have to say, very gently, that Mr Gibbs was always unable to answer the very simple question of why Guinness Peat Group could not incorporate within New Zealand but had to stay incorporated within the United Kingdom—a very simple mechanism to avoid the consequences of these taxation changes. It has something to do with the tax loss companies held in the UK—
Hon Dr MICHAEL CULLEN Link to this
I have not been told. It has something to do with the tax loss companies held by Guinness Peat Group in the UK, which can be offset only against UK taxation, not against New Zealand taxation.
The uneven operation of the current regime—the disadvantaging of some and advantaging of others—has to be addressed, in some form or another. It has always been an extremely difficult public policy issue. Many suggestions have been made, over the last 2 or 3 years, about the best way to do so. This is the best set of compromises, I believe, that we are capable of coming up with, moving forward into the future. In particular, it is very important to send the signal, given where we are in the world, that the New Zealand Government no longer says it prefers New Zealanders to invest offshore in the older, lower-growth countries—such as the UK, Germany, and so on—and not in the new, more rapidly developing countries in Asia and elsewhere, with which we will have growing economic links in the future. It is hard to say we are part of that developing world of economic growth if we then have a taxation system that discriminates against someone who invests there rather than, if you like, in the old world.
These reforms are complex. This is a complex bill, in most of its parts. The bill also has other matters in it that will be welcomed by a wide range of business interest groups. Those matters address particular issues, like geothermal exploration, for example. I am sure the Finance and Expenditure Committee will want to consider the bill very carefully. I have no doubt it will suggest some changes. I have never seen a tax bill that provides for a complex structural change to come back to the House without being altered, in some form or another. I look forward to the bill returning to the House, and I look forward to New Zealand having a fairer system that, in particular, does not overtax low to middle income earners on their savings.
Hon BILL ENGLISH (National—Clutha-Southland) Link to this
Dr Cullen made at least one mistake in his speech when he said a number of solutions to those problems had been proposed in the last 2 or 3 years. In fact, Parliament has been wrestling with some of these issues for at least 10 years. This bill has come forward as part of the Government’s confidence motion around the Budget; therefore it must have the support of New Zealand First. I am pleased that party has become more thoughtful than it was last time, in 1998, when it was got at by the savings industry, which opposed proposals put forward then to deal with the overtaxation of lower-income earners.
That was the name of one proposal—Taxation of Life Insurance and Superannuation Fund Savings. In fact, the savings industry became really wound up about it, and Winston Peters, at the last moment, pulled the plug on that legislation. Fortunately, he is now out of the country and not in a position to pull the plug on this legislation; or it could just be that he is not getting the same support from the savings industry that he used to get, so he is not taking any notice of what it says any more. I hope he is not listening to the Guinness Peat Group instead—I will come back to that.
The savings industry’s problem, at that time, was compliance costs. In fact, the real problem was a whole generation of bad savings products, which were too complicated, lacking in transparency, and ripping off savers with fees that could not be justified if they were ever found out. I am pleased that that industry has become slightly more mature in its approach and more understanding that the needs of customers are more important than its need to hide the ridiculously high fees it has charged for shonky products for a whole generation. That has been one of the problems with savings in New Zealand. Everyone can remember the magic graphs that insurance salesmen used to have, whereby one would put in money for 5 years, and could get back what had been put in at the end of those 5 years—there was something called a “surrender value”. Those days, fortunately, have come to an end.
I hope someone will get up and explain the decision about the Guinness Peat Group, because although the savings industry in general has accepted this bill, that group did not. It is absolutely remarkable that a Minister of Finance would oversee a decision-making process in which the shareholders in one company get a 5-year holiday. I am sure the Finance and Expenditure Committee will be interested in the logic behind that decision. Occasionally, one-off decisions are made about taxation. I can recall providing, during a brief but glorious stint as Minister of Revenue—which no one else can remember except me—the taxation underwriting for The. A specific exemption was given, which meant the taxpayer underwrote it to the extent of $300 million. Of course, the gracious Helen Clark has claimed all the credit for that, although she had nothing to do with it—nothing whatsoever.
Darren HughesThat is right. So a one-off decision is not unusual. That decision was transparent and the reasons why it had happened were explained in the House. I want the Minister, or one of his little followers, to get up and tell us what is behind the Guinness Peat Group decision.
I do not want to question the integrity of these particular Ministers, because I think they are straight. But this is a context whereby the Minister of Communications is trading political favours with Vodafone, a large multinational that he has the responsibility of regulating. He asked the company a political favour when he was right in the middle of making decisions that could cost it millions of dollars, and it does him the favour. Now, of course, he is obliged to look as though he is not returning the favour, which effectively makes the decision. The decision is made; the decisions will go against Vodafone on mobile termination rates, because it now absolutely has to or the Minister will be guilty of corruption. It is about as simple as that. In that environment the Guinness Peat Group decision needs to be explained.
I take Dr Cullen’s point that the select committee will look at the balance of compromises in this bill—because it does contain a balance of compromises. National certainly supports the idea that people with a marginal tax rate of 19c on their earned income should not be taxed at 33c on their savings income. That has long been an anomaly and, for all the reasons Dr Cullen gave, it is a bad thing. The question, though, is whether the compromises are correctly balanced.
This is where we come to the issue of the abolition of the “grey list” and Dr Cullen trying to dress up that revenue grab as some venture into the new world of the Indian stock exchange, and that we are all hanging out to invest in these fast-developing countries. Some New Zealanders are, and some will, because they have a different risk premium from the average. But I think that is a pretty feeble excuse for trying to find the money to balance up what he gives away, with moving to a fairer regime for some taxpayers. I hope the select committee will look into whether that balance is right.
The other issue is the threshold around the $50,000. As my colleague pointed out, if one goes to the Retirement Commissioner’s website, one will find that $50,000 worth of savings does not represent a significant income, at all. The fact that half of New Zealanders over 65 have nothing like that level of savings is a tragedy and a shame, for them and for the country. But that threshold may well be far too low. We may well find that quite large numbers of New Zealanders on middle to average incomes—maybe even on high incomes—have most of their savings tied up in their houses and only a relatively small amount in cash savings that can go into these kinds of investment vehicles, and that that threshold may be far too low. National, of course, is opposed to capital gains taxes. Knowing that the Government will pass this bill because new Zealand First has finally grown up and taken legislation seriously, our members on the select committee will almost certainly argue for a much higher threshold, if we cannot get rid of the capital gains tax altogether.
There is another matter covered by this bill that should not go without remark, even though the whole Budget debate has focused on it. It is that the bill confirms the tax rates for this next year. I want to draw attention to an issue my colleague John Key brought up in the House yesterday: Dr Cullen’s unwillingness to be honest with New Zealanders about his intentions for personal tax rates. In 2005 he made a decision at the urging of United Future, which used its leverage—for once, usefully—to index income tax thresholds. Then, after the election, Dr Cullen gave the impression he would have to give that away because the Government had abolished the carbon tax, which I see in the Budget is about $360 million. That is quite a chunk of money. Then I picked up the Fiscal Strategy Report of the Budget and saw on page 44 that the Government’s decision to index income tax thresholds will stop wage earners from rising up through the income tax rates. It states in the Budget that the Government has made a decision to index income tax thresholds.
But Dr Cullen will not say whether the Fiscal Strategy Report is wrong and that the Government has not made a decision, or, in fact, that it has made a decision. It is in the forecast—one can put anything one likes in the forecast—but the Budget states that the Government has decided. So why can he not just go out and say that, yes, he is raising thresholds and that that is a tax cut he can afford to give? Well, he cannot say that, and the reason he cannot say it is that he spends all of his time in the House saying we cannot afford tax cuts. So which is true? How come New Zealand’s Minister of Finance cannot publicly repeat a statement in a Budget document that he signed himself?
That is why the House, particularly the Opposition, notes with regret that this bill will confirm the tax rates. Of course, Dr Cullen could afford to index the income tax thresholds this year; he could have afforded to do it last year. He could have afforded quite significant tax cuts, even if they were not as big as National’s. That is what should be in here, because that would lower the marginal tax rates of a whole lot of New Zealanders. The National Party’s package had 80 percent of New Zealand taxpayers on a marginal tax rate of 19.5c. Well, that is Asian; that is really getting competitive. That is really giving people the incentive to get ahead. But, unfortunately, this bill passes up the opportunity to make some real change in tax thresholds, and the opportunity to introduce even Dr Cullen’s “chewing gum” tax cuts.
R DOUG WOOLERTON (NZ First) Link to this
As expected by the National Party, New Zealand First will be supporting this bill going to the Finance and Expenditure Committee, and, as a member of that committee, I look forward with intense interest to delving into some of the questions raised by the members who have spoken before me. I am sure, with the collegial atmosphere that exists in that committee, we will give it what I colloquially call “a going over” to see what is behind it.
New Zealand First favours investment, we favour savings, and, more especially, given that we are not a high-wage economy, we favour investment made by those on relatively low wages. Again, as has been pointed out by previous speakers, we have a situation of what I still like to call managed funds, which is the easiest investment vehicle that people who do not have a huge knowledge of investment, and who would not regard themselves as experts, tend to choose to invest their hard-won dollars in. It has been most unfair for people on relatively modest wages and on a relatively low tax scale to have their investments taxed at a flat rate of 33 percent. I think that all parties agree that that situation is iniquitous and it has to be changed. At long last this bill will change it, and we in New Zealand First certainly applaud doing that.
We then get into the business of having some interesting sorts of developments that have arisen historically amongst countries that trade in a like nature to New Zealand. They are countries that have tax regimes and economies similar to ours and are considered to be so-called friendly countries, if I can use that term. Those countries are encompassed in the “grey list”. We have heard technical explanations of the “grey list” from people far more qualified than I am to speak about it, but suffice it to say that some of those countries, and some of the firms investing in those countries, were paying very little tax, or no tax, at all.
So it is interesting, when we hear people talk about private enterprise, free competition, and so on and so forth, to see that we have had a dual standard in existence in New Zealand. We have had investment for the masses, if you like, in managed funds that are taxed at 33 percent—way above those people’s personal income tax rate—and we have had other investments through companies that invested in those overseas “grey list” countries that have been taxed at a very much lower rate or—as we are now finding out—paying no tax at all. I, for one, will be interested as a member of the Finance and Expenditure Committee, which will examine this bill, to see not only what has been going on but also to see how that situation can be put right for the future, and we will certainly do that.
The exemption for Guinness Peat Group is an interesting one. I offer the explanation that was put to me, which is that it was not a conspiracy, and there was nothing hidden under the bed that I could work out. But we had an iconic company in New Zealand that was invested in by thousands of New Zealand mums and dads who followed a man called Ron Brierley and who have, in many cases, turned very modest investments into substantial ones. As that company moved offshore, so did those people with their investments, because they had no choice, other than to pull out. That company subsequently morphed into something called “GPG” or Guinness Peat Group—is that the correct terminology?
So they have had the advantage of that investment. I agree with the two Ministers who have said that the fuss and bother that accompanied that move, and the excellent public relations of that company, have upset a lot of people who invested in a company in New Zealand. That company has now moved offshore, and those people are being caught out and will be disadvantaged. We will discuss in the select committee whether members agree with that view and what we should do about it, but I think that pragmatism has reigned with this bill, from what I have seen of it. The Ministers have said that the Government will look at having a 5-year exemption. I have heard it called a holiday, but there will be a 5-year time period in which the directors of that company may make a decision as to whether they want to bring the company back onshore, and go along with the rest of the investment regime in this country, or leave the company registered in foreign climes.
I noticed in the latest Independent that the chief executive officer of that company has said that that move is great, but he is not happy with the situation. He wants to push harder, further, higher, and all of the rest of it—and, knowing his reputation, with all due respect I would not expect him to do otherwise. That is exactly what I would expect him to do. But the company has a period of time in which to tidy up that matter and put the company into New Zealand ownership, if the directors so wish. I say quite clearly it is my understanding that that matter will not be determined by virtue of either Mr Brierley or Mr Gibbs; it will be determined more by virtue of the mum and dad shareholders—if we can use that term—in the Guinness Peat Group.
However, that is the situation. We will look at all these issues, and we will indeed ask questions around that matter and around many of the other aspects of the bill. I heard some members say that this bill is another tax grab or some other iniquitous imposition on people that the Government is making, but the facts as we know them at this point are that this move will cost the State $110 million net—that is the figure the Government mentioned—so it can hardly be called a grab made by the Inland Revenue Department from investors at this point. We will see how that pans out.
I want to talk for a moment about the investment regime for New Zealanders. As our name suggests, New Zealand First believes that a country that does not promote itself, either to other countries around the world or to its own citizens, is a country that is not proud of itself, not confident about its future, and it should take a good look at itself. I am pleased to hear that the two Ministers who have spoken so far are talking in that vein. They are talking about sending a message to New Zealanders. We want them to invest in our own country. We want them to be proud of the country. We can make good returns for them in our country, and, most important, we can use the money—the savings that they have—beneficially for the businesses in this country. There is no need for us to be making people in foreign countries wealthier.
I look forward to debating the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill in the select committee. I am sure that committee will come back in due course with a very sensible decision made across all parties.
JEANETTE FITZSIMONS (Co-Leader—Green) Link to this
There are some very positive measures in the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill that the Greens support. There is also a huge missed opportunity to make the tax system broader-based, fairer, and less of a layer upon layer of amendments to remedy anomalies—which has left us, frankly, with a bit of a dog’s breakfast of a tax system.
The Greens strongly support the look-through rule for New Zealand - managed funds, which will now be taxed at the personal rate of the investor. One could not think of a bigger disincentive for people to save than if those people earn less than $38,000, and their savings are taxed at the same rate as those of people who earn a lot more than that. If KiwiSaver is to prosper, that amendment is essential, and for that reason alone the Greens will support this bill going to the Finance and Expenditure Committee. But we hope the select committee process might bite the bullet and look much more broadly at the opportunity the bill presents to fix the tax system further.
We also support the removal of the anomaly whereby overseas investments have been taxed inconsistently, depending on whether they are funds, or investments by individuals. That inconsistency has been remedied. There is no reason why investments by individuals should be taxed differently from investments of those who put their money into a managed fund.
We also support the move to remove the incentive for people to take a considerable amount of their salary as a superannuation contribution, just to avoid tax. Tax law that creates incentives to make moves that one would otherwise not make, just to avoid tax, is bad law, and getting rid of that anomaly is a good thing. We support the removal of discrimination against investing in New Zealand. It was certainly an anomaly that one would be taxed at a higher rate if one invested in New Zealand rather than overseas—so far so good. But in removing some anomalies the bill creates some others, because it is yet another add-on to a tax system that actually needs a more thorough overhaul.
Let us look for a moment at what a tax system should do; I believe there are three things. Firstly, it needs to raise enough revenue to meet the Government’s needs for expenditure. That is a question of how much one taxes, and there will always be political differences around that question. Secondly, it needs to be fair, and that is a question of who is taxed and at what rate, and there will always be political differences around that question. But, thirdly, a tax system must not set perverse incentives to do the wrong thing in order to avoid paying tax. I would have thought there might be some measure of agreement around the House that we do not want a tax system that sets perverse incentives.
The Greens have argued for a long time that we need to broaden the tax base so that we pay less income tax and raise revenue in other ways. We need to start taxing the “bads” in society instead of just the “goods”, so we should tax income, hard work, and enterprise less, and we should tax pollution and waste more. We propose a system of ecological tax reform that would take off tax on the first $5,000 of everybody’s income, which means every taxpayer would get the same rebate; and, instead, tax things such as carbon, toxic materials, and waste to landfill—the environmental “bads” that we are trying to have less of.
As part of that broadening of the tax base, we have always questioned why earned income pays tax and unearned income does not. That seems to us to be a serious anomaly that the bill fiddles with but does not really address. We have always proposed that there should be a proper investigation of whether unearned capital gains, which are taken as income, should be taxed in the same way that wages and salaries should be. Support for this position arrived in the weekend from a rather unexpected source. I want to quote from a column by Mary Holm, who is the financial adviser in the money section of the Weekend Herald. She has written a very sensible article. Her column states: “The heart of the problem, it seems to me, is that the officials are proposing changes within an already flawed tax system. They will remove some flaws but inevitably create others.” The article goes on to state: “Why shouldn’t capital gains be taxed? Arguably, the gains that people are lucky or skilful enough to make merely by holding an appreciating asset should, in fact, be hit harder than the wages people make by working. What we need is an inflation-adjusted tax on all capital gains, much the same as income tax.”
The article later states: “Other taxes could be cut and many people would end up paying lower total taxes.” Mary Holm points to some other benefits: “And while accountants and lawyers would get less tax work,”—because this would be a very simple system—“we would free up some bright people to help solve other problems.” Surely we need our bright people doing more in life than just finding tax loopholes for people with a lot of money.
The Green Party position is not, at this stage, a final policy on capital gains tax, because to finalise such a policy would involve a lot of work that the resources of six MPs cannot do. We need a Government department to do a proper investigation of what that would involve. We note we are almost the only OECD country that does not tax capital gains on a broad basis—Australia, the United States, and most of the OECD do so. Therefore, to do so would not, at first sight, bring about the end of Western civilisation.
The bill proposes a capital gains tax on gains from overseas shares, but not a capital gains tax on New Zealand shares or property. That tends to fuel the rise in house prices from investment housing property, which makes it very hard for Kiwis to buy their first homes. So a number of social implications come from this legislation, as well. There are some very major issues to crunch here; for example, should capital gains tax apply to the family home? We think it should not, but it certainly should apply to the rest of the property market—that needs investigation. Should the tax be on the realised value or the unrealised value of capital gains? To what extent should that tax be inflation-adjusted, and how exactly would that be done? This is the time that those issues could be crunched.
I go back to Mary Holm’s column, which quotes Brian Fallow’s article in the “Business Herald” the other day: “a capital gains tax ‘is a politically poisonous proposition. At the height of the mid-1990s boom, then (Reserve Bank) Governor Don Brash’ ”—and I recommend that Dr Brash’s colleagues look at this article—“ ‘suggested a capital gains tax on investment property, but the MPs on the finance and expenditure select committee shrank back from their seats as if he was offering them plutonium lollipops.’ ” We know this is a politically dangerous area that MPs will not go near, but, in fact, we have gone near it. The tax exists now on some capital gains but not on others. That is an unfair anomaly. We are all paying more income tax because the gains we make from unearned capital gains are not taxed.
This is the time when we could crunch those issues. Dr Cullen has a whole department of capable people to do that for him. We will continue to argue that that work should take place before this bill is finally passed.
HONE HARAWIRA (Māori Party—Te Tai Tokerau) Link to this
Everyone in this House knows the ad on TV where the All Blacks are stranded on the side of the road and looking for a lift. One by one, they get picked up, starting with the forwards in the latest Ford, and working back to Joe Rokocoko, Dougie Howlett, and Rico Gear, who have to ride in a Ford Model T. They all drive off to the song with the lyric: “That’s my black jersey you’re wearing every time when you run out to play”.
Members of the Māori Party know that every time we come into this House, with every bill we analyse, every word we speak, and every position we take, we carry with us the pride of the kaupapa we wear, which is the pride of being Māori, the passion in being Māori, and the priorities of being Māori. Every time we front up, we know we must do our utmost to defend Māori rights and advance Māori interests for the benefit of this nation, because our people expect it of us, in exactly the same way that our whole nation has expectations of our rugby team. It is a kaupapa we wear with enormous respect. Our responsibility to that brand—the Māori brand—also requires that we commit to analysing and taking a position on every bill that comes before the House, including strange ones like this Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill.
Yes, they are big words. This bill states that for a mere $110 million a year, the Government can foster a savings culture and resolve investment issues. So how will that affect Māori? There will be a small elite group of the kinds of people Te Puni Kōkiri’s recycled funding is catering to who may benefit from increases in asset values. That is cool. Some people will get an opportunity to improve their position through savings investments, and those lucky enough to have investments in shares might not have to pay tax. That is great. But the fan base this Parliament is responsible for includes people who come from all walks of life, and most of them simply do not fit this bill’s intentions, at all. That group of people, which includes Māori, consists of nearly two million people who get less than $25,000 a year. That is right; there are nearly two million such people who, between them, contribute $3.5 billion in tax—the taxes that allow the Minister of Finance to announce a $9 billion surplus in the Budget.
That group also includes the other half of the population, who are the taxpayers who bring the average income up to $38,000, and that includes all the MPs in this House. But the difference is that one half of the population has the means to benefit from these asset value increases, and the other half does not. In this game of two halves, it is clear to see that the lower half—those in the low-income bracket—are not being looked after properly.
Beneficiary families are doubly disadvantaged under the Working for Families package, in particular, for a couple of reasons. First, beneficiaries are not allowed to get anything from this package, and, second, 230,000 children also dip out. Although the Government thinks it is clever to reward workers and try to force those not in work to go to work, it has miscalculated badly by denying the kids, who have no say in the matter.
The Māori Party is also aware of the huge difference in income that exists between Māori and Pākehā, as noted in the report of the United Nations special rapporteur. We also note that Māori earn $4 an hour less than non-Māori. The 2001 census also states that the average Māori income was $15,000, compared with $20,000 for the average Pākehā income. That is the financial background to our current status as tangata whenua in our own land. That is the environment we live in. And then, in an environment where Māori statistics are high in all the wrong places, and where targeted funding is the best way to achieve changes in those statistics, we have a Minister of Māori Affairs who, in the Budget round, chose not even to bid for any new money.
It is well-nigh impossible to contemplate that in an environment with appalling health statistics for Māori, horrendous arrest, conviction, and prison statistics for Māori, poor education statistics for Māori, and the unacceptable mortality rate for Māori, the Minister simply did not see the need for new money to address the very real needs of his own people. Yet, not only did the Minister of Māori Affairs not bid for new money—and he was roundly congratulated on his frugality by his Government not giving him any new money—but he even allowed one of his flagship programmes, manaaki tauira, to be dumped. Such is the environment in which Māori are forced to live—an environment where their own Minister refuses to come to their assistance when they are suffering from the classic symptoms of economic violence.
Economic violence is when people are denied access to resources and power, and when their dignity and even their existence are under threat. We see the results of economic violence in poverty, debt, bad credit, having the power and phone cut off because bills are not paid, not being able to get a fresh start, and anger and frustration at not having enough money for gas, doctors’ bills, food, and clothes. Economic violence makes people feel less than human, leads to social conflict, and limits people’s potential. Economic violence breeds chronic poverty across generations. It makes sick people worse, and it increases the gaps that this Government no longer has any interest in closing.
That is the environment in which we come to the House today to talk about a savings culture—so let us cut to the chase. The chance to invest in Australia without penalty is OK, but it ain’t a big deal. What is a big deal for the Māori Party, though, is how we measure the real wealth of this nation—how a particular bill will affect us as a people, what a bill will mean for our mokopuna, and how it will affect everyone else in Aotearoa. What is the plan? We look at every bill to see how it affects our well-being, not just our wallets. Will it reduce inequality? Will it help get rid of child poverty? Will it make us a better nation? We ask how an economy can be healthy if its growth is based and measured on constantly using up limited resources. How can building a jail be called capital investment when its sole purpose is to isolate people from reality and punish them, and then increase society’s problems when they get out of jail? That is how GDP is measured. In fact, GDP can grow even when poverty is getting worse, which is probably why the Government shies away from developing a standard by which we can measure poverty. The Māori Party is proposing a new way of keeping our national accounts by measuring the quality of our society. It is called the genuine progress index, and, if it were adopted, Aotearoa could become a world leader in measuring the true value of a nation’s economy.
The Māori Party will vote for this taxation bill to go through its first reading, so as to give us all time to think creatively and intelligently about how we could reduce the gap between the haves and have-nots in this nation. Such is the game we all play, and we dare not lose.
SHANE JONES (Labour) Link to this
I rise to support this further development to regularise our tax laws, in order to ensure that tax anomalies do not drive the investment decisions of New Zealanders, and that the tax professionals will not have the capacity—rapacious, I might say—to derive even more innovative schemes to evade, circumvent, or further complicate the taxation system. I look forward to the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill coming to our Finance and Expenditure Committee.
I follow my whanaunga Hone Harawira, the honourable member for Te Tai Tokerau, but I want to talk about the content of the bill. I am not interested in redefining economics to suit the views of deep ecologists or other far-flung thinkers who are a hangover from the San Francisco flower power movement, in terms of finding the most sophisticated way of measuring the affairs or activities within an economy. We need to bear in mind some key points. Some extraordinarily innovative proposed legislation is being considered by the Finance and Expenditure Committee at the moment. It is designed to grow the number of Kiwis who are saving, and also provide them with an option to move into home ownership. The bill we are debating is related to that intention, and it will ensure that people are not unreasonably penalised for their investment decisions when they are investing in Australasia—that is, Australia and Aotearoa.
I am sure that legions of lawyers and bankers, and a variety of other professionals, are matching their wits and skills against those of the learned officials from the Inland Revenue Department—and one or three from Treasury—so I look forward to that contest. However, I have no doubt that the sovereign powers of the State, as reflected through Parliament, will continue to be vigilant to ensure that those people who are moving into creating a greater sense of worth and long-term security through a savings culture are not penalised by unfair taxation rules.
In relation to what the bill is trying to achieve at a deeper level, I remind members that mention was made earlier by the Green Party speaker, Jeanette Fitzsimons, of Mary Holm’s writings— which were somewhat fanciful and led to all sorts of letters from confused contributors to the New Zealand Herald—about whether we would be better off lessening the burden on income tax and increasing the burden on capital in general. That is a fine philosophical point, but this bill ensures that those who have enjoyed a loophole will have to work on the same playing field and on the same basis as those who live in “Strugglers’ Gully”, who do not have access either to the sophisticated advisers or the disposable wealth needed to be able to enjoy the cleverly “conspired” and conceived schemes that, in my view, give an unfair advantage.
I look forward to hearing what my friends from the National Party have to say about these issues when the bill gets to the select committee. It disappoints me that the most loquacious of the boys from the National Party, Mr Foss—the mokopuna of Granny Smith and a possum in the headlights—is absent, but no doubt he will find great fault with this bill, which is very unwise of him. However, I look forward to the bill coming to the select committee. No doubt there will be a considerable number of submissions—not the least of which will focus on how the Guinness Peat Group has captured its current status—and I look forward to hearing from a variety of other entities.
CHRIS TREMAIN (National—Napier) Link to this
It is interesting to hear Mr Shane Jones speak of possums caught in headlights. That was a good way to end his speech. In my speech today I will focus on some possums caught in the headlights. I will address Part 1, “Annual rates of income tax for 2006-07 tax year”, and Part 2, “Amendments to Income Tax Act 2004”, which focuses on offshore investment and shares in collective investment vehicles. But I do not want to pass up the opportunity to have a look at that annual taxation level in Part 1, which is a fairly brief part, I have to say—in fact, so brief that the explanatory note states only: “The rates that will apply are those in schedule 1 of the Income Tax Act 2004.” In short, it means there is no change.
I would like to take a moment to reflect on Michael Cullen’s maiden speech, when looking at this bill. It is interesting to reflect on the goals mentioned in one’s maiden speech. Earlier today he mentioned the word “arrogance”, and in that respect I want to quote from his maiden speech: “I am proud of the fact that my secondary education was not paid for by the taxpayers of New Zealand but by the farmers of Canterbury and Hawke’s Bay. I ripped them off for 5 years then, and I shall get stuck into them again in the next few years,”. I say: “Congratulations, Dr Cullen. You’ve done damn well, in that respect.” That reinforces his commitment to the annual rates: there is no change—there is no relief in taxation rates or indexation rates for farmers. In fact, farmers were not mentioned throughout the entire Budget. But in terms of lack of taxation relief, Dr Cullen has ripped off not only farmers but also police, nurses, engineers, fitters and turners, stevedores, watersiders, seafarers, printers, customs officers, teachers, flight attendants—
That is the point I am making. The list includes writers, firefighters, paramedics, and lecturers. They are all hard-working Kiwis, but include many of those whom Dr Cullen purports to represent. They will not receive any break in their tax rates over the next year. Those people, like farmers, are looking for incentives to get ahead. But what has been provided? Nothing! They are taxpayers—the very people who allow us to have a safety net, who allow us to have a welfare system. Without them it would be very difficult to provide a growing safety net.
They are the people with true transferable skills. In case Dr Cullen does not realise it, we are now living in a global economy where those skills are transferable. For those people—watersiders, seafarers—their standard of living is critical. We do live in a wonderful country; there is nothing surer. I am as patriotic as anybody, but I want to be able to provide at least a similar standard of living to that of Australia, in order to retain those people whose skills are critical to our nation. The facts are that our living standards are not moving ahead as they should be, if we were to be truly patriotic about this country and about keeping those key people here. The fact is that wage rates in Australia in 2000 were 20 percent ahead of ours, and are now 33 percent ahead of where we are now. It is those things that are taking people overseas.
Helen Clark tells us she wants wage rates like Australia’s—well, she did in 1999. She made this comment in an address in 1999 at the New Zealand Trade Centre: “I for one prefer New Zealand to have rates of growth and living standards akin to”—wait for it!—“Australia.” Well, what the heck is she doing about it? She is doing nothing. Wage rates are continuing to rise, yet the bill we are debating does nothing about that. When the Opposition raises questions about growing wage rates, members opposite say: “Bugger off, then.”. They sit there and wave goodbye. Far from being unpatriotic, members on this side of the House set strong aspirations for those key people I have mentioned—for our seafarers, printers, and many other union members, whose skills are necessary for this nation. Helen Clark says she wants the same—at least she did in 1999. I shall quote her again from that time, when she said she was not prepared to stand back and see the best and brightest leave, taking their ideas and even their businesses with them.
Brian ConnellHelen Clark, in a speech to the Contractors Federation conference. Can members believe it?
Where is the action now? We know that in 2003, 10,000 left; in 2004, 15,000 left; in 2005, 21,000 left. They waved goodbye. But members opposite say: “If you don’t like it here, goodbye! See you later.” They wave goodbye to our hard workers, like policemen, printers, and seafarers, then they tell Opposition members that we are being unpatriotic. Forget it! How many people will it take to leave for the Government to acknowledge there is a real problem?
Peter Costello has made it a whole lot harder. That man understands that providing incentives for those key people is important. He knows what it takes to grow an economy, and to provide the very best services possible. It takes hard workers who want incentives to get ahead—and there were 21,000 of them in 2005. Peter Costello is standing at the gates of Sydney airport, with his arms wide open, saying: “Come on in.” Meanwhile, this Government is saying: “If you don’t like it, goodbye.” I would like to remind this Government about the parable of the goose that laid the golden egg: the Government should not forget that those key people we are talking about—policemen, seafarers, and printers—are important to this country, and that they need incentives to get ahead.
Let us have a quick look at the Australian Government. For the fourth year in a row it has introduced massive, across-the-board tax cuts of A$36.7 billion, which in New Zealand is equivalent to $45 billion. Those cuts are a massive incentive. But let us not focus too much on tax cuts. What tax cuts do is allow wage growth, and people are going to Australia for better wages.
Michael Cullen and Helen Clark say there is no room for lower taxes, even though there is an $8.5 billion surplus. I will give members a couple of quotes from Mr Cullen. In September 1999 he said that New Zealand would move to match Australia on company tax, but only when conditions allowed it. I would like to know when conditions will allow it. He has set a few goals: “Well, maybe when the operating surplus gets high enough.” That surplus is $8.5 billion. Then he changed the goal to when the operating balance, excluding revaluations and accounting changes, got high enough. That balance is $7 billion. Then he changed the goal again and said not to worry about the operating balance, excluding revaluations and accounting changes, but to worry about it only when the cash surplus got big enough. That cash surplus is 1.5 billion. I want to know when we get to the point where we can provide incentives for hard-working Kiwis to get ahead. It is not in this bill.
So I say congratulations to Mr Cullen. He has succeeded in relation to his maiden speech comments about farmers—that he had ripped them off for 5 years while he was at school, and that he would get stuck into them over the years ahead. He has managed to do that to farmers, and he has also managed to do it to police, nurses, engineers, fitters and turners, stevedores, watersiders, printers, customs officers, teachers, flight attendants, writers, firefighters, paramedics, and lecturers—to all hard-working Kiwis.
A party vote was called for on the question,
That the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill be now read a first time.
Ayes 71
Noes 48
Bill read a first time.