11. GORDON COPELAND (Independent) Link to this
to the Minister of Finance
When he said in the House on 13 February “I do not think the phrase ‘chewing gum tax cuts’ came from New Zealand taxpayers at large. I remember where that particular phrase came from.”, was he telling the House that he went back in Budget 2007 on the tax cuts he announced in Budget 2005 just because a member from an Opposition party labelled his plan the “chewing gum tax cuts”?
What is the Minister’s position on the regular adjustment of the $38,000 and $60,000 tax thresholds to account for inflation—does he believe such adjustment to be right and just, or does he intend to continue to allow real tax rates to increase for hundreds of thousands of Kiwi taxpayers through bracket creep?
Hon Dr MICHAEL CULLEN Link to this
I note that the member did not mention the $9,500 tax threshold—the bottom tax threshold—for most income earners. I can tell the member that on Budget day I will be announcing a programme of tax cuts, over a 3-year period, that will, in each and every one of those years, exceed indexation. [ Interruption] Hopefully, the member Bill English will have the opportunity to vote against, yet again, tax cuts.
Is the Minister aware that the cumulative inflation from 1 April 2000 until today is 23.8 percent, so that just the maintenance of the 1 April 2000 tax rates in real terms would see the 33c threshold moved from $38,000 to $47,000 and the 39c threshold moved from $60,000 to $74,000; that his failure to move the thresholds means he has increased income tax by about $1.37 billion per annum; and that although it may be convenient to do that, it is actually unjust?
Hon Dr MICHAEL CULLEN Link to this
That income has been used for, amongst other things, the following purposes. Firstly, it has been used to lift the rate of New Zealand superannuation, which was cut by the previous National Government. Secondly—
Hon Dr Nick SmithHon Dr MICHAEL CULLEN Link to this
Oh, that is an election bribe—to increase the rate of New Zealand superannuation. I thank Dr Nick Smith for getting that on the Hansard record. That is very helpful today—1 April. I can tell the member that April Fool’s Day stops at midday; he can give up the effort from now on. Secondly, that income has been used for Working for Families, to deliver huge real gains in incomes to people with family responsibilities. Thirdly, it has been used to cut the cost of going to the doctor, and to cut the cost of prescriptions, which has helped hundreds of thousands of New Zealand families. Fourthly, it has been used for 20 hours’ free early childhood education entitlements. It has been used to introduce interest-free student loans. It has been used to freeze, for a period of time, student fees, and to limit the growth in those fees subsequently to about, or not much more than, the cost of living increases. All of those things have helped vast numbers of ordinary New Zealand families, and I could go on until 4 o’clock with other examples.