6. HEATHER ROY (Deputy Leader—ACT) Link to this
to the Minister of Finance
What percentage of New Zealanders now pay the 39 percent tax rate his Government introduced, when he said on 23 December 1999 that: “Ninety-five percent of people will not be asked to pay more tax. Instead, only the top 5 percent of income earners will pay more.”, and what would the cost be of honouring that statement and restoring the threshold to the top 5 percent of income earners?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
Latest figures show 10.6 percent of taxpayers are in the top bracket. It would cost around $273 million per annum to move the top threshold to 79,000, which would be the relevant point for 5 percent, on the latest estimates. This would give roughly $22 per week to everyone on over $79,000 a year, and nothing to the nearly 90 percent of New Zealanders who earn less than $60,000 per year. Of course, income earners in the top bracket now pay only 30 percent on a wide range of savings vehicles, compared with 33 percent in 1999.
Can he confirm that the proceeds of this creeping taxation have never been spent, that they have only ever contributed to his burgeoning operating surpluses, and that they should have been given back to hard-working Kiwi taxpayers well before now?
Hon Dr MICHAEL CULLEN Link to this
No, I cannot. I cannot claim to have run a cash surplus every year since 1999-2000. What is more, I remind the member that, along with a number of other people I am sure, she has criticised the Government in recent months for too loose a fiscal position. She has just asked for a looser one than the one we are operating. I remind the House again that this Government maintains the tightest fiscal stance of any political party in the Parliament.
H V Ross Robertson Link to this
What other changes to the financial position of New Zealanders have occurred since December 1999?
Hon Dr MICHAEL CULLEN Link to this
First of all, of course, a hugely greater number of people are in work—some 300,000-odd New Zealanders; superannuitants get about $50 a week more, for a married couple, than they did in 1999; 70,000 children have been lifted above the income poverty threshold; and the annual cost of going to a doctor has fallen from about $940 a year on average, to $440 a year. These are the kinds of programmes the Government’s fiscal policies have enabled us to introduce, and of course we have massively increased spending on public transport, roading, and infrastructure in general.
R Doug WoolertonDoes the Minister agree that a flat tax rate has a greater impost on the less well-off than a graduated tax scale, and that a reduction in the top tax rate and adjustments to thresholds would provide greater tax equity?
Hon Dr MICHAEL CULLEN Link to this
There are a number of ways in which the taxation system could be altered. Some of those have significant equity improvements, and some have significant equity reductions. I notice that the question implies the move that would have the largest equity reduction.
Hon Dr MICHAEL CULLEN Link to this
The total cost, as at the last financial year, of tax reduction initiatives since 2004 is $1.7 billion. This will rise to $4.5 billion by 2010-11, with no further changes.
Does he deny that his secret agenda is to adjust the threshold in the next Budget so that only the top 5 percent of income earners will be required to pay the top rate of tax, as he originally promised in 1999, and does he truly believe that taxpayers are so naive that they are blind to the fact that he has been saving his surplus for years in order to deliver a massive election-year spending spree with which to coerce and bribe voters?
Hon Dr MICHAEL CULLEN Link to this
If it was a secret agenda I could neither confirm nor deny it, of course. What I can confirm to the member is that the Government will be announcing its long-term programme around taxation well before the election next year, and probably in the context of the Budget. But I tell the member not to hold her breath for the largest gains going to herself and a few others.
I seek leave to table a speech made by Dr Michael Cullen on 23 December 1999 where he said that only the top 5 percent of income earners would be—
Madam SPEAKER