4. Hon BILL ENGLISH (Deputy Leader—National) Link to this
to the Minister of Finance
What percentage of people with taxable incomes of $1 or more are expected to be paying the top personal income tax rate of 39 percent in the 2008 financial year?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
I should say that Inland Revenue Department data does not separate $1 from zero in terms of its own data, so the best answer I can give is that 12.9 percent of taxpayers are expected to pay the top income tax rate in the 2008 income year.
Does the Minister believe that he has kept faith with all those New Zealanders whom he told back in the year 2000 that 95 percent of New Zealanders would not face any increase in taxes as a result of his policy?
Hon Dr MICHAEL CULLEN Link to this
That statement was true at the time it was made. Of course, we also promised people that, unlike under a National Government, they could expect reasonable wage increases, as well.
Charles ChauvelHas the Minister seen any reports that show how much savers are better off under KiwiSaver tax credits and other enhancements, compared with other tax proposals?
Hon Dr MICHAEL CULLEN Link to this
I have seen a report that shows that at every income level, savers receive more in their KiwiSaver accounts from tax credits and employer contributions than from the National Party’s 2005 proposed tax cuts, which Mr English believes were unaffordable at the time and are unaffordable now.
Judy TurnerIs the Minister aware of any immediate impacts of the new charities regime, which was secured by United Future?
Hon Dr MICHAEL CULLEN Link to this
Indeed. Jan Cameron, who announced that she had gone to Australia because of the previous charities tax regime, promptly announced that she was coming back to New Zealand. So we look forward to her charitable giving going into New Zealand charities rather than Australian ones in the future.
Can the Minister confirm estimates by Treasury and others that up to $1 billion of current tax revenue comes from people moving into higher tax brackets because of the effect of inflation on their incomes?
Hon Dr MICHAEL CULLEN Link to this
It depends on how long the period of time is that the member refers to, in that particular regard. I note that in the much-vaunted Australian comparison 20 percent of Australian taxpayers pay their two top tax rates of 40 and 45 percent.
What reports has the Minister seen comparing enhanced KiwiSaver with the proposed indexation of income tax thresholds?
Hon Dr MICHAEL CULLEN Link to this
I have seen a report that shows that middle and high income earners will be between $10 and $14 better off by contributing to KiwiSaver as opposed to indexation.
Why did the Minister withdraw the tax cuts he had promised for two Budgets, which would have adjusted thresholds for the affected people’s rising incomes, and why did he think that the people who might benefit from that were the ones who should pay for the company tax cut?
Hon Dr MICHAEL CULLEN Link to this
I thank the member for his confirmation that National opposes the corporate tax rate cut, and would put it ahead of any personal tax rate changes. It is, of course, the corporate tax rate cut that is more likely to lead to increased economic growth, increased productivity, and increased real wages in the future. The reality is that indexation changes would have delivered very, very little to anybody earning under $38,000 a year. The sum that comes to mind, I think, is 67c a week. That is itself, of course, one-thirtieth of the amount that such people can gain from contributing to KiwiSaver.
R Doug WoolertonIs the Minister aware of any reports suggesting that most New Zealanders would rather pay higher taxes, provided they have good essential services; if so, what are those services?
Hon Dr MICHAEL CULLEN Link to this
There have been many such reports over many long years. Indeed, we need to cast our minds back only some 7½ to 8 years to realise the alternative. In 1999 tax rates were proposed to be cut, and New Zealand superannuation was cut to pay for those tax rates.
Can the Minister confirm that he has argued that any tax cut would lead to teachers and doctors being sacked, and how many teachers and doctors will be sacked to pay for the company tax cut he has just announced of over $1 billion?
Hon Dr MICHAEL CULLEN Link to this
It would indeed be true that there could have been a personal tax cut instead of the corporate tax cut. It is hard to understand why a right-wing party would choose that particular option when a corporate tax rate cut is more likely to deliver increased economic growth. But if the member cares to come to the next business meeting I have—I had one last night and one this morning—I am sure he can explain his strange views to business people at that point.
Why did the Minister not answer the question I asked about how many teachers and doctors would be sacked to pay for his tax cut, or is it the case that a Labour tax cut is one that can be done out of surpluses, while a National tax cut is one that has to be financed out of expenditure—what kind of ridiculous economics is that?
Hon Dr MICHAEL CULLEN Link to this
If the member cares to do his numbers, he will find that the corporate tax rate cut has an effect of just over $1 billion a year. That sum includes the money for export subsidies and the money for skills training. The member seems to have forgotten that his party was proposing personal tax rate cuts alone of $4 billion a year.
Can the Minister confirm that he has consistently argued that any tax cut will lead to the sacking of nurses and doctors, and will he tell us which nurses and doctors Labour will be sacking, or will he stop running that stupid argument?
Hon Dr MICHAEL CULLEN Link to this
I can confirm to the member that I have consistently argued; it is a virtue I recommend to him.