2. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
How will Budget 2010 make the tax system fairer?
Hon BILL ENGLISH (Minister of Finance) Link to this
A stream of bad decisions taken by the previous Labour Government over recent years—
Mr SPEAKERI do not need to hear the point of order. I simply say to the Hon Bill English that when he is asked “How will Budget 2010 make the tax system fairer?”, to start with “A stream of bad decisions taken by the previous Government” is hardly answering the question asked, and it is out of order.
The Budget will seek to undo a stream of bad decisions made by the previous Government. The previous Labour—
Members may not have noticed, but a point of order was called, and any interjections during a point of order will see someone out of the House.
Hon Darren Hughes Link to this
As you pointed out, Mr Speaker, the question on notice, which comes from the Government side, is clearly about Budget 2010. You made an intervention, which the Minister deliberately flouted, and the Minister’s answering questions like that will lead to disorder. He can give a solid answer based on that primary question.
Absolutely. I agree with the honourable member that there is no need to start answering the question that way. It is bound to lead to disorder. Once the Minister has given an answer, he knows he can probably make some comment, but to start answering that way is inconsistent with the Standing Orders. The Minister should start by telling us what he is planning to do with tax in the Budget, as the question asks.
Budget 2010 will seek to undo a stream of decisions made by the Labour Government that allowed too many New Zealanders to essentially choose the rate of tax they will pay. Labour did this by creating a proliferation of different tax rates across different entities, and this has undermined the wider sense of fairness in the tax system. We want to make sure that people pay the statutory tax rates and do not exploit the opportunities provided by the previous Labour Government for higher-income taxpayers to pay less tax.
The Government has the option of simplifying the tax system. The previous Government left us with a proliferation of tax rates; for instance, it set the top personal tax rate at 39c, the trust rate at 33c, the company rate at 30c, and the rate on high-income investors at 30c. It may not be possible to bring all these rates into line, but we can reduce the number and spread of the tax rates so that the system is fairer to New Zealand taxpayers.
Stuart NashHow is it fair that, under details of the tax package leaked by the Government to the Sunday Star-Times, someone on $150,000 gets a tax cut nine times as large as someone on $50,000?
The member will have to wait for the details of the package, as I pointed out to him previously. He needs to bear in mind that under his Government a self-employed person on $150,000 could virtually pick what tax he or she paid. We want to fix that unfairness.
There will be a number of ways in which people will be able to judge it. People will be able to use standard measures of equity such as Gini coefficients, or ratios between different quartiles of income earners, or look at how actual households benefit from the changes. We will look at eliminating the glaring inequities in the tax system that the previous Government left behind. I can also indicate that we expect the overall effect of the package to be pretty much neutral across different income levels.
Does he consider a tax cut package that delivers a $2 a week tax cut to almost 70 percent of all taxpayers while delivering a $90 a week cut to the top 1 percent is a fair package?
I am not sure I heard exactly what the Minister said in that answer. I believe he said he would not believe anything someone said. The question asked how certain reductions in taxation were fair. The Minister can certainly dispute the figures given, but to do it in such a way that I perceive to be derogatory to the questioner is not acceptable. The question was a fair one. It might have been wrong but the Minister can point it out if it is wrong, without being derogatory.