1. RODNEY HIDE (Leader—ACT) Link to this
to the Minister of Finance
What is the total extra income tax revenue he has collected because of fiscal drag since becoming Minister of Finance?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
According to Inland Revenue Department estimates, $1.49 billion in total from 2000 to 2006, which represents 0.5 percent of tax receipts over that period. For the year 2006-07, the estimate is a further $250 million on top of that.
Does the Minister of Finance accept that if he allowed for the effect of inflation on bracket creep, he would have to give people on the average wage an extra $35 a week just to take them back to where they were before he became Minister of Finance?
Charles ChauvelHon Dr MICHAEL CULLEN Link to this
Recent Budgets have delivered over $4.6 billion a year in tax cuts to families, business, and savers. I note again that the National Party voted against all those tax cuts, and I expect it will vote against further tax cuts next week.
Ron MarkI raise a point of order, Madam Speaker. I am not sure whether you are aware from there, but the speakers down this end are very, very low and we cannot hear. We hear with difficulty at the best of times, but I ask whether something could be done about the speakers.
Madam SPEAKERAs I said, I have asked those who are responsible for the sound system to look at it, but in the meantime we just may have to be a little quieter in order to hear each other.
What tax cut does the Minister believe, then, that a person on the average wage without children would have to have in order to compensate for the extra tax he or she has paid as a consequence of bracket creep?
Hon Dr MICHAEL CULLEN Link to this
Real post-tax net income in New Zealand has risen over the last 6 or 7 years. The member will have to wait until Thursday next week, and I look forward to his voting for tax cuts next Thursday afternoon. I think that the ACT party probably has a more principled position on these matters than the National Party.
John KeyWhich set of journalists is the Government being honest with: the ones it is spinning to that tax cuts will not start till 1 April, or the ones it is spinning to that actually tax cuts will start on 1 October—or is the correct answer “none”, in the same way that it was not honest with any of them about what Toll Holdings cost to buy?
Hon Dr MICHAEL CULLEN Link to this
From a man who once pretended to be a great international financial market speculator, that shows he does not know that companies carry debt.
Is the introduction of a tax-free threshold the most effective way of delivering tax relief to those on low and modest incomes?
Hon Dr MICHAEL CULLEN Link to this
I previously thought it would be, and, indeed, advice was developed along those lines to Cabinet. But officials are making it clear that up to 90 percent of people on incomes below $18,000 per annum are to be characterised as being on temporary low taxable income or on benefits or superannuation for which the tax rate at that level is not a particularly important factor. There is an excellent discussion of this matter in a book called Unfinished Business by, apparently, the late Sir Roger Douglas, given that somebody pretending to bear his name has put out a completely different policy this afternoon.
Gordon CopelandDoes the Minister accept that if he had adjusted the tax bracket thresholds for inflation between 1 April 2000 and 1 April 2008, as I have been advocating for some years now, he would be leaving in excess of $1 billion in the purses and pockets of Kiwi taxpayers in this fiscal year, compared with the present position?
Hon Dr MICHAEL CULLEN Link to this
I think from the figures I gave previously the number would be somewhere around $1.8 billion, which clearly does not translate into a tax cut of $38 a week unless one structures that in quite an unusual fashion.