10. STUART NASH (Labour) Link to this
to the Minister of Finance
Does he believe the tax system is fair for all New Zealanders?
Hon BILL ENGLISH (Minister of Finance) Link to this
The tax system is certainly fairer than the one we inherited from the previous Government, although there is always room for improvement. For instance, we have brought in changes that increase the effective tax rate on investment property, which was not being taxed under the previous Labour Government, netting just short of $1 billion of extra tax per year; closed loopholes that allowed well-off families to claim social assistance—
I raise a point of order, Mr Speaker. It is a primary question; I asked whether it is fair for all New Zealanders, not fairer.
Mr SPEAKERThe member makes a reasonable point. The question asks whether it was fair and it did not ask why, so I think we have had sufficient answer.
Was the Government’s own Tax Working Group wrong when it said “a large component of economic income is not taxed—capital gains.”?
It was stating a fact. Members will note that the Tax Working Group came to the conclusion that it would not recommend implementing a capital gains tax, and it certainly would not have backed the messy, complex, high-spending, high tax, high borrowing—
I raise a point of order, Mr Speaker. All I asked was whether the Government’s Tax Working Group was wrong, and he said it was not wrong. I do not need a further explanation.
The member—[ Interruption] A point of order is being considered, and there is merit in the point being made. Questions are to be answered without further embellishment, according to the Standing Orders. The more brief the question and the less political the question, the less room there is for embellishment in the answer.
Was the Government’s own Tax Working Group wrong when it said “There are equity and fairness arguments that can be mounted in favour of a capital gains tax.”?
I have not actually seen that quote, but it may well have said that. Making tax policy is always a trade-off between fairness, efficiency, and complexity. Unfortunately, the Labour Party’s package loses on all three.
Was the Government’s own Tax Working Group wrong when it said “A capital gains tax is generally said to support the integrity of the tax system by reducing opportunities for tax planning and tax avoidance.”?
It may have said that, but it clearly lacked the certainty of its convictions, because its members could not come to agreement about a capital gains tax and did not recommend implementing one, despite the arguments it raised for it.
I realise the point the member is going to make on this occasion, but I believe that it would be unreasonable to say that the Minister can say only yes or no, because to give some context that is helpful in ensuring the answer is meaningful is not outside the Standing Orders. On this occasion, I believe that is what the Minister was doing. That was not unreasonable. It was not superfluous embellishment, and it was not attacking the Opposition; it was just pointing out that although the Tax Working Group may have expressed that view, it did not carry it through into its recommendations, and that is a perfectly valid context to put around an answer.
Hon Clayton Cosgrove Link to this
I seek leave to table the Tax Working Group report, given that it may be of assistance—
Is it really fair that a working person earning $50,000 a year pays around $8,000 in income tax while a person who sells an investment property for $50,000 profit does not pay any tax on that income?
That may well not be correct, because there are quite a number of people who trade in investment property. But if the member is trying to make a general point about fairness, there was nothing fair about Labour’s tax system—
Hon Craig Foss