5. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
What recent advice, if any, has he received outlining the effect of an increase in GST on families?
Hon BILL ENGLISH (Minister of Finance) Link to this
That effect, of course, depends on what other tax changes accompany a proposed increase in GST. During the third term of that member’s Government, GDP per capita dropped—that is, the average income per person fell—which is bad for families.
Hon David Cunliffe Link to this
How much will a mum and dad, both earning $48,000, have to pay in additional GST if GST is increased to 15 percent?
I cannot tell the member the answer to that question, because people do not pay GST on all their outgoings. Rents and interest payments do not carry GST, as other payments do. In any case, it makes no sense to make that calculation independent of other aspects of the tax package. I thought that the member would have known not to get excited about this issue, given the lack of excitement around his bus tour.
Mr SPEAKERHon David Cunliffe Link to this
Assuming that both parents fully spend their income and thus are subject to GST on all of it, will this family, with both parents earning $48,000, benefit from a 5 percent cut to the top tax rate; if so, by how much?
Again, I cannot answer that question, but I say that the member puts the case for axing the tax better than some of his colleagues. For instance, in Invercargill he got a crowd of eight, whereas in Rotorua Phil Goff got only three.
Hon Steve Chadwick Link to this
I raise a point of order, Mr Speaker. I wish to table the document covering that visit to Rotorua, where—
I have got no idea what that alleged point of order was about. [ Interruption] I am on my feet. Just because the member may not have agreed with something that was said, that is no grounds for a point of order. The junior Opposition whip should know that.
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. We had a little bit of back and forth previously about things that were verified and things that were not. I think it is appropriate, if the Deputy Prime Minister makes something up in that way, for my colleague to offer to provide evidence to show that he is not telling the truth.
We have heard enough on this matter. I accept the basis of the point of order from the Hon Trevor Mallard that gratuitous comments when answering questions are not helpful. I think anyone can see they are not helpful. At times, clever comments can add to the good humour of the House, but gratuitous and snide remarks do not help.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. In the previous two supplementary questions a simple, arithmetic, and very specific question was asked of the Minister of Finance. The first time he responded he alleged it was impossible to answer, for a technical reason. That reason was covered off in the second supplementary question. In both questions, as you previously remarked, he attempted to avoid answering by making comments on a completely separate matter. I seek leave to re-ask a previous—
I listened very carefully to the Minister’s answers. He pointed out that no precise answer could be provided to the questions the member asked, because assumptions would have to be made about where the supposed family spent their money. Even the second question the member asked, if I remember correctly, was about two parents earning $48,000 each and spending all their income. Assumptions would have to be made about where that income was spent, because not all expenditure incurs GST. The Minister gave a perfectly fair answer: he pointed out that there was no precise answer to the question.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. I concur with your judgment on the first of those supplementary questions, but in the second supplementary question the information was provided to the Minister that in the scenario all of the income was spent on GST taxable items and therefore would be subject to the whole rate. The point is that the Minister, armed with that assumption, made no attempt to even begin to answer the question, and then diverted to comments about meetings in Rotorua. You have previously ruled that Ministers given straight questions are obliged to give straight answers. We have made every attempt to get a straight answer.
I hear the member. Had he lodged that question as a primary question, I would have backed him. But I think it is unreasonable to expect the Minister to do a computation in response to a supplementary question over an example plucked out of the air.
Hon David Cunliffe Link to this
Would the Minister compensate the hypothetical family for both the increase in GST and the resulting increase in inflation, estimated by Westpac and the Governor of the Reserve Bank to be a further 2 percent?
We will not be compensating hypothetical families; we will be compensating actual families. A range of tools is available, including adjustments to benefit levels, adjustments to national superannuation, adjustments to Working for Families payments, and reductions in income tax rates.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. I regret to detain the House, but the question, again, was very specific. It was on the consequential effects of inflation, on which specific estimates have been given within the last week. The Minister did not refer to inflation in his response, which was consequently meaningless.
I think the member is asking too much of the answer to a supplementary question. If he thinks back to the supplementary question, he will find that only part of it related to inflation; I think there was a further element to the question. The Minister is not obliged to answer every part of the question. I think the Minister gave a reasonable answer to the question.
Amy AdamsFairness is one of the Government’s principal objectives in making any tax changes. We have inherited—[ Interruption] Members opposite should be careful in their criticism, because on their watch they changed tax rates in a way that encouraged people to avoid paying those rates to the extent that, for instance, the number of wealthy New Zealanders paying tax on $1 million did not change in 9 years under Labour, despite the fact that the economy grew. That simply makes the point that for very high-income earners the tax rate was essentially voluntary.
Hon David Cunliffe Link to this
Taking the Minister at his word, who would be better off after compensation—a family of two earners on $48,000 or a single earner on $1 million—and by roughly how much?
That will depend on the individual circumstances. For instance, the Government has made it clear it is going to extend the tax base by lifting the effective tax rates on property. The ownership of property is generally related to people’s level of income. Higher-income New Zealanders will pay more GST if GST goes up, are likely to pay less income tax if income tax rates go down, and could end up paying more tax on property that they own or sell.