7. JOHN KEY (National—Helensville) Link to this
to the Minister of Finance
Will the indexation of income tax thresholds go ahead in 2008, as promised in the 2005 Budget; if not, why not?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
Any changes to tax thresholds will be considered in light of the final decisions around the business tax review.
Does he agree with the comments made by Peter Dunne, the Minister of Revenue, yesterday when he said: “The business tax reduction proposals I announced with Michael Cullen in the Business Tax Review in July will go ahead from April 2008, and they will be accompanied by personal tax adjustments as well …”—not just “might” but “will”—if not, why not?
Hon Dr MICHAEL CULLEN Link to this
I am sure there will be some business tax changes. As to whether all the ones in the business tax review will proceed, I would be rather doubtful. As I said, implications for income tax thresholds and other matters will be considered in the light of the outcome of that, and, of course, the fiscal situation at the time.
Charles ChauvelHas he seen any reports from the export sector on the importance of getting decisions around tax policy right?
Hon Dr MICHAEL CULLEN Link to this
They have woken up at last; it has taken a long time today. I have seen a number of reports, including one from the chairman of Fonterra, highlighting the need to ensure that undue pressure is not placed on the export sector. Certainly, excessive fiscal loosening, which pushes up the pressure on interest rates and the exchange rate, will not help the export sector in current circumstances.
Does he agree with Peter Dunne that not only will tax cuts proceed on the back of very large surpluses but they will be the largest tax cuts since 1996; in which case, would he be so kind as to tell the House just how large those tax cuts in 2008 will be?
Is the reason the Minister protested so loudly and stomped his feet up and down last week about tax cuts not because the tax cuts are not affordable—because the leader of New Zealand First, Winston Peters, knows they are affordable; the Minister of Revenue, Peter Dunne, knows they are affordable; and his own Prime Minister has been out telling people they will be taking place in 2008—but because when one is at the end of one’s political career one likes to defend what one has done, or, in his case, not done, rather than what a Minister of Revenue and future Minister of Finance may do in 2008?
Hon Dr MICHAEL CULLEN Link to this
One of the important differences between that member and me is that I am happy in my job and want to continue in it.
Can the Minister of Finance therefore confirm that he is the only person who is happy he is in his job—because no one else in New Zealand is?
Hon Dr MICHAEL CULLEN Link to this
Unfortunately I cannot confirm that. Indeed, more recent opinion polls seem to show growing approval of the Government’s economic performance. But I do note that just at the point where it looks a little more likely there may be some taxation changes, a number of commentators are starting to warn against them. That is precisely what one would expect would happen.
Did the Minister meet with Moody’s rating agency yesterday, and did he ask it about the impacts of a modest tax cut on New Zealand’s rating?
Madam SPEAKERHon Dr MICHAEL CULLEN Link to this
The member might know that when rating agencies call they largely ask the questions and I supply the answers. What the agency wanted assurance about was that there would be no sudden lurching around in the Government’s fiscal policy, and I was able to give it that assurance.
When the Government rolls out tax cuts in its 2008 manifesto, in the miraculous way that it found the cash to extend Working for Families and to offer zero percent student loans, who does he think should actually take credit for that: the New Zealand First leader, Winston Peters; the United Future leader, Peter Dunne; or the Prime Minister, who is out there telling people that tax cuts will take place in 2008?
Hon Dr MICHAEL CULLEN Link to this
There is one thing I am very sure about: if there are very large tax cuts, everybody will try to take credit for them; if there are not, I will take the sole credit, I am sure.
Who does he think will actually announce the tax cuts to be announced in 2008, as part of the Government’s election manifesto: Phil Goff, Trevor Mallard, or any of the other pretenders to his job?
Hon Dr MICHAEL CULLEN Link to this
The only young pretender I know in the House is opposite me, and he looks really silly in a kilt.