1. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister
When he told the House on 9 February that New Zealand taxes consumption at a relatively low rate, was he aware that New Zealand had the sixth-highest rate of consumption taxation in the OECD as a percentage of GDP; if not, why not?
Rt Hon JOHN KEY (Prime Minister) Link to this
When I made the statement that the Leader of the Opposition refers to, I was aware that 23 out of 29 OECD countries had a higher rate of GST or VAT than New Zealand. Only Canada, Japan, Switzerland, Korea, and Australia had lower rates of GST. My statement was therefore 100 percent correct.
In calculating the figure in the way that the Prime Minister has chosen to, has he taken into account that, actually, New Zealanders pay more GST, because there are hardly any exemptions, whereas most of the other countries, at the ordinary headline rate, have major exemptions?
Yes. It is called broad based - low rate, and it was designed by Phil Goff and his Government in 1986.
I seek leave to table the OECD statistics extracts that show that New Zealand, before the GST increase, has the sixth-highest rate of consumption taxes as a percentage of GDP.
Mr SPEAKERNo, it is a different document from yesterday’s. Yesterday’s document was a bar graph showing that; this is the actual extract from the OECD.
As I said some time ago, when I was asked whether GST would rise, it was in relation to covering deficits. That is not why we are raising GST; it is because we are also lowering personal income taxes. What I do know is that the last time GST was raised in this country—I think it was in 1989—by the then Labour Government, there was no compensation for anyone.
I seek leave of the House to table this document, which states “National is not going to be raising GST”—
Before anything is quoted from the document, we need to know what the document is. What is the source of the document?
The source of the document is actually, originally, a video of what the Prime Minister said on television. This is from the New Zealand Herald.
Will the increased rate of GST take more from low to middle income people as a proportion of their income than from wealthy people?
Mr Speaker, I am sure that is not the world that you lived in; it was directed to the Prime Minister.
What is the Government’s estimate of how much, in dollar terms, the increase in the rate of GST will add to the average price of a new home for a first home buyer?
Would the Prime Minister think that if the average cost of construction is about $300,000, the extra price that a new home purchaser will be paying is about $7,000 to $8,000 extra in tax?
That may or may not be correct; we will need to work our way through that. What I can say is that the two most important factors in the affordability of a home for someone are interest rates and his or her after-tax income. Under a National Government—
I raise a point of order, Mr Speaker. I think the Prime Minister answered the question by saying he did not know. That was the answer, and the rest of his answer is extraneous.
I do accept the point of order that it was a very, very tight question, and therefore there should not be further information given on it.
How many letters has the Prime Minister received recently like the one that I have in my hand, which was copied to me but addressed to him, saying the relentless increase in Government charges like accident compensation, road-user charges, and, soon, GST and taxes on property has put this man out of business, and he—Mr Key—is out of touch with the costs facing ordinary income earners in this country?
I get about 2,000 pieces of correspondence a week, so I cannot tell the member exactly. What I can say is that I have never had a hand-delivered note written by a member of my caucus telling me that I am “outski”; that is for sure.
I seek the leave of the House to table the letter that I have just referred to, in which the gentleman concerned said Mr Key has effectively put him—