3. Hon BILL ENGLISH (Deputy Leader—National) Link to this
to the Minister of Finance
What changes to statutory personal income tax rates and thresholds has the Government made since 1999?
Hon TREVOR MALLARD (Associate Minister of Finance) Link to this
Since 1999 a new top tax rate has been introduced, and taxes on savers, businesses, and families have been cut by $4.6 billion. This reflects tax cuts for savers of $1,448 million, for businesses of $1,545 million, and for families of $1,622 million. For a family with one earner on the average wage of $45,800 and with two young children, this translates to an effective tax cut of $118 per week, compared with the tax paid by a family on the average wage in 1999. That does not, of course, include support for that family’s savings through KiwiSaver.
Can the Minister confirm that, in fact, Labour has made no changes to the statutory personal income tax rates and thresholds, and that its record in Government has been to refuse to reduce taxes when New Zealand could afford it, because it wanted to spend the money; to promise tax cuts before the 2005 election, and then, after Labour was re-elected, to break that promise; and now to make it clear how much it hates having to promise tax cuts, which it has to do for its electoral survival?
Hon TREVOR MALLARD Link to this
The member is wrong, right from the beginning of his question. Of course there has been a tax rate change since we have been in Government. We put up the tax rate for the highest income earners right at the beginning.
Hon Mark GoscheCan the Minister tell the House how the tax paid by an average family changed between the years 2000 and 2007?
Hon TREVOR MALLARD Link to this
According to the OECD’s Taxing Wages 2006/2007 report, the tax burden for a one-earner married couple on the average wage and with two children fell from 13.6 percent to 2.8 percent—that was before the extension to Working for Families on 1 April last year. At the same time, that family would have seen cuts in the cost of going to the doctor, which Tony Ryall wants to reverse; prescription costs fall; and saving for retirement made easier.
Does the Minister disagree with reports that people in Australia have to earn more than $195,000 a year before they pay more tax, as a proportion of their income, than people in New Zealand do, and that by the time Australia has implemented another 4 years of tax cuts, people in Australia will have to earn $1.6 million before they pay more tax, as a proportion of their income, than people in New Zealand do?
Hon TREVOR MALLARD Link to this
No, I cannot confirm that. But I can tell the member that the OECD report shows that the tax wedge for a one-earner married couple on the average wage with two children—that is, income tax plus employee and employer contributions, less cash benefits—as a percentage of labour costs, is 2.8 percent in New Zealand, and in Australia it is 15.1 percent.
Jeanette Fitzsimons Link to this
Can the Minister assure the House that if any tax cuts are given in next week’s Budget, they will benefit low-income earners and beneficiaries at least as much as higher-income earners; if not, can he tell us what the hell happened to the Labour Party?
Can the Minister tell the House why Labour thinks it is more important to spend $600 million on more diplomats, which it announced 2 months ago, rather than spending it in the way that the Greens, who apparently support the Government, want it to spend it—on child poverty—and rather than handing it back to households on the average wage that are hurting because interest rates have doubled under Labour and food and fuel prices are going through the roof?
Rt Hon Winston Peters Link to this
What further reports has the Minister heard of people making up party policy on the hoof—like we just heard—when it comes to foreign affairs policy in this country; but, more particularly, what reports does he have that suggest that the Government between November 1990 and 1999 followed the Hawke-Keating or Howard-Costello economic prescription with which members opposite make so many comparisons today?
Madam SPEAKERHon TREVOR MALLARD Link to this
Yes. It is absolutely obvious that the approach that the National Government took to drive down the wages of New Zealanders, and its approach on the question of savings, were exactly the opposite of those of Australia, and that that is why we are a poorer country now.
Can the Minister understand why taxpayers are worried about how he uses their money, when standards of public administration under the Labour Government are so low that Ministers tried to hide unlawful conduct at the top ranks of the Immigration Service for 12 months, and when no sanctions were applied until this matter was made public by the media?