7. Hon DAVID PARKER (Labour) Link to this
to the Minister of Finance
Does he agree with economist Gareth Morgan that the lack of a capital gains tax is “the biggest tax rort in the country and one that has cost us all dearly in terms of efficient allocation of capital, economic growth and employment”?
Hon BILL ENGLISH (Minister of Finance) Link to this
I think if Mr Mallard had seen what Dr Morgan has said on this, he would have prevented this question too from being asked. In respect of capital gains, Dr Morgan has said: “There should be no exemptions—
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. I reflected on the beginning of that answer. It would, of course, be a breach of privilege for a member to prevent another member asking a question, and members are not allowed to make that allegation in this way.
Mr SPEAKERI was simply observing what occurred in the House. I am not trying to say whether it was procedurally correct, but quite clearly that member overruled the asking of a question. That may be against the Standing Orders; we did not draw attention to that.
I do not think we need to pursue this further. I think when answering questions it is not helpful to make that kind of comment.
Dr Morgan has said: “There should be no exemptions, certainly not on the family home which is the biggest tax shelter” of all. I understand that his comment after the recent package was announced was that if we exempt the family home from our tax, we are sort of knocking ourselves over the head before we start running, which I think was a very good description of Labour’s whole package.
Does the Minister of Finance agree with Westpac Chief Economist Dominick Stephens that “New Zealanders are incentivised to borrow money to buy land rather than invest in productive assets. If we introduced a capital gains tax, that incentive would be diminished, and there would be a greater incentive for people to save via bank deposits or productive business ownership.”?
That economist should get himself up to date with the measures the Government took in last year’s Budget, which mean that this year we will take about $1 billion extra tax—or a bit under, actually; about $850 million extra tax—from the property sector, which is a much larger amount of tax revenue than that member’s package would take out of that sector for probably about 10 years.
Does the Minister’s Budget forecast, under current economic and tax settings, show an increasing current account deficit, rising to around 6 percent of GDP, funded by more overseas debt each and every year to the end of his projections, and does that not suggest to him that significant structural changes like a capital gains tax are needed to cure New Zealand’s structural problems?
The Government is applying itself to New Zealand’s structural problems. I can tell that member that both we and the public believe that packages that include significant increases in taxes, increases in Government spending, and increases in Government debt will make those problems worse, not better. In fact, I warn that member that a predecessor of his—Dr Cullen—campaigned on the current account deficit, and managed to double it in the time he was Minister of Finance under the previous Government.
Was the Government embarrassed when Pattrick Smellie reported that “Finance Minister and Facebook page-owner Bill English didn’t get the presumably intended answer when he asked visitors to the page whether they supported the Labour Party’s proposal for a capital gains tax. When BusinessDesk last looked, at 4.15 p.m., 314 people had voted 88% in favour of a capital gains tax.”?
Was the Government embarrassed to read the Herald on Sunday state: “Apart from borrowing money and talking up a questionable programme of asset sales, National is showing no signs of a plan to get us out of the mess we’re in.”; if he is not embarrassed, is he at least very concerned that he might be on the wrong side of this issue, given that so many senior economists and commentators believe that New Zealand’s structural problems need a structural cure that the Government has not delivered?
No, but I was embarrassed for the Labour Party to see people whom it would expect to vote for it quoted in the media in the last week supporting the Government’s plan. In fact, most New Zealanders understand what needs to happen in this economy, and they have confidence in the John Key - led National Government to find our way through the recession in a considered way and to build a platform for strong economic growth over the next 5 years.