1. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister
In stating that “this Government introduced a balanced package of tax cuts” was he saying that his tax changes and the tax system are fair to all New Zealanders?
Rt Hon JOHN KEY (Prime Minister) Link to this
The tax changes we introduced in Budget 2010 were fair. They increased the fairness of the overall tax system, compared with what we inherited from Labour. For example, two-thirds of the total cost of the income tax cuts went to reducing the tax on the bottom two income brackets—that is, on income under $48,000 a year. Almost three-quarters of income earners now have a top statutory rate of 17.5 percent or less. A number of groups now pay a fairer share of tax, including property speculators and leveraged foreign companies. We removed the incentive for people to shelter income in trusts, and we invested $120 million over 4 years in the Inland Revenue Department in Budget 2010 to improve the policing of, and compliance with, tax rules.
How is it fair that a person on the average wage of $48,000, coping with a soaring cost of living, got just a tax cut of $28 a week to cope with that, but somebody on, say, $393,000 a year got $350 a week in tax cuts?
It is fair in the sense that one looks at the tax burden of what people pay; someone on $393,000 a year pays a lot more tax. Secondly, someone who earns a lot more pays a lot more in GST. The reality of the New Zealand tax system is that New Zealanders on higher incomes pay more in that area, and a lot of the tax burden is met by those in the higher-income brackets.
Does he think that the tax cut of $13.77 a week gained by a person on the minimum wage has fully compensated that person for the soaring cost of living?
What it has compensated them for is the change in GST. What the member opposite is trying to do is confuse a position where there is a difference between GST rising from 12.5 percent to 15 percent, and an overall increase in costs because of inflation or other issues that might be prevalent—seasonal adjustments, for instance. I know that because, for instance, in the last 2 years of the Labour Government cheese went up 50 percent—and we had waited 9 years for a tax cut. I know that because the price of chickens went up 44 percent. I know that because the price of milk went up 23 percent, the price of petrol went up 22 percent—
Mr SPEAKERWhy is it fair that in the Budget tomorrow he is intending to take from people who are on low and middle incomes and are KiwiSavers over $500 a year that they were otherwise entitled to, but he is not touching the tax cuts of thousands of dollars a week that he gave to the highest income earners?
The first thing is that the member has only one more sleep before he has a chance to see the Budget, so I would not necessarily make assumptions. The second thing is—
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. We have worked very hard to get straight questions, and starting an answer in that gratuitous way does not help. I also put in a second point of order, which has to do with whether Ministers are still required to address you when they are answering, rather than the backbenches or the gallery, and nothing in between.
I will deal with the latter part first. It will be no surprise to the member that it has often been a practice of Prime Ministers, for years, to address the back of the House. [ Interruption] I am on my feet. I am not too troubled by that, as long as members are aware that when I get to my feet they should be silent. The Prime Minister did sit down pretty promptly when I got to my feet. To deal with the first point, I believe the Prime Minister’s comment was not particularly unkind. It simply pointed out that there is one more day until the Budget. The question asked about a matter to do with the Budget, and asserted that something would be happening in the Budget. It is kind of dangerous prior to the Budget to make assertions about what is in the Budget. For the Prime Minister to make some reference in a light-hearted way—and it was not made in a nasty sort of way—that the Budget is still to come is not, I think, desperately bad. That is why I did not pull up the Prime Minister, but I will be listening carefully to make sure that when straight questions are asked, the questioner is not attacked. I do not think it was particularly unfair, at all, to make a light-hearted reference to the fact that there is still a day to go until the Budget.
As I was saying, the member has only one more sleep until he will be able to see what is in the Budget. The second thing I would say is that it is worth noting that if we look at the top personal tax rate and the tax cut changes of 2010, we see that they amounted to about $400 million to $500 million per year, which is something that Labour goes on and on about, out of a $2.5 billion personal tax package. In other words, 20 percent of the tax package went to the highest income earners.
Are the Inland Revenue Department figures quoted this morning correct in stating that the tax paid by 17,244 dairy farms in 2009 totalled $26 million, representing the average annual tax paid by those farms of $1,506 each; if not, in what respect are those figures incorrect?
There is a huge difference between turnover and profit, just as there is a big difference between lamb chops and sausages.
The senior Government whip should know that when a point of order is called, there should be no further interjections.
The question was very specific. I did not talk about income or turnover. I asked whether three specific sets of figures were correct, and, if not, in what respect they were incorrect. I could not have asked a straighter question than that.
Forgive—[ Interruption] I have just called the senior Government whip to account, so the deputy leader of the Labour Party will also not interject. If the member cannot see what he is walking into in asking a question like that, with those figures, I cannot assist him.
The member will not interrupt me. I listened very carefully to the question, and I just grimaced because I could pick what kind of answer the answer would be. I cannot help members if they do not think about the questions they are asking.
I raise a point of order, Mr Speaker. I ask you to examine the question that I asked. It was a straight, factual question about whether three sets—
The Leader of the Opposition will resume his seat. I will examine it, I promise him, but I am absolutely certain that what I heard was very clear and I am not remotely surprised at the response to it.
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. I know that some members opposite have a special interest in this area. Mr Speaker—
The member will resume his seat immediately. Some members will be leaving the House very soon. The point I have been emphasising day after day is that members need to think about their questions when they ask them. They should not ask the Speaker to help members who walk into traps when they are asking questions. Forgive me, but that is the reality of life. I am warning members that I am not of a mood to be trifled with on this. For example, I saw this just yesterday—I cringed when I heard a supplementary question asked, because I could just see what the answer would be and I thought “Surely not!”. I ask members to think about it.
I raise a point of order, Mr Speaker. I seek your leave to ask the supplementary question again, word for word, identical to how I asked it last time, and to let you make a judgment as to whether any of the comments that you have just made relate to the question I asked.
The question was absolutely in order. I have no problem with that whatsoever, but the nature of what the member actually asked, including his question, made me cringe as I heard it. Forgive me, but I listen to questions very carefully, because I have to protect—I say to members of the Opposition that I have sat down Ministers. I sat down the Prime Minister in the previous question. I have not seen a previous Speaker do that. I have helped the Opposition more than I have seen previous Speakers do, but I cannot assist—[ Interruption] There will be silence; some members of the front bench of the Labour Party will be leaving this House very shortly if they are not careful. I cannot assist if members do not think through the questions they ask. I listen very carefully. Yesterday I stopped the Deputy Prime Minister on a straight question from the shadow Leader of the House because the question was a straight question and the Deputy Prime Minister started to launch into an unfair comment. I cannot assist where questions are asked that lead to answers on which I simply cannot provide any help.
Are Inland Revenue Department figures reported this morning correct in stating that the tax paid by 17,244 dairy farms in 2009 totalled $26 million, representing the average annual tax paid by those farms of $1,506 each; if not, in what respect are those figures incorrect?
I cannot confirm whether they are correct, but I can say that they are a small slice of what is paid by dairy farmers if one was to accept it at face value. The press release put out by DairyNZ said: “We need to set this straight. Our figures show that on average approximately $300 million tax is paid per year by dairy farms,”. I say to the member that if he does not know the difference between turnover and profit, then goodness knows what his Budget will look like one day.
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. I think it should be obvious to you from the tail end of that question that there was no discussion of turnover in the Leader of the Opposition’s question. There was no suggestion of turnover. It was all about profit and tax paid. I ask you to tell us that you think the Prime Minister’s reply was appropriate, and to also indicate now whether you think that that question was wrong—
Regarding my comments I made about the question previously, having heard all the material that the question related to, forgive me but I do not change my position on it whatsoever.
Is the Prime Minister saying that the material provided by the Minister of Revenue in written answers to a member of this House were, therefore, wrong?
No. I am saying that that reflects one portion of what may be paid by those farmers at one snapshot in time.
Hon David ParkerWell, here is the other portion. There are lots of people that work on farms and they actually pay PAYE. There are many other years that go into farms. There are many other parts of the industry. [ Interruption] Let me say to Trevor Mallard that if he is telling us he is changing the company tax rules and the way they work for every company in New Zealand, then I say he should go for it. He should go out there and tell New Zealanders that they now pay tax on turnover, and that they do not pay it on profit. I tell members that that will be a staggering speech, considering that David Cunliffe was in the paper today saying there will be some remarkable new things that we will be surprised about. Wait until New Zealand companies find out that they are paying tax on turnover—what a cracker that is going to be.
I raise a point of order, Mr Speaker. The Prime Minister’s answer related to turnover. I never mentioned turnover anywhere in the question.
Enough steam has been let off on this one, and I accept both sides of the House feel quite strongly about it. I did not stop the Prime Minister on that occasion because he was responding to a very loud interjection. The Prime Minister was answering in a pretty straightforward way until there was a series of interjections, and I did not want to kill that exchange. But I think we now have let off a lot of steam on this question and we will come to some form of order now.
If the figures given by the Minister of Revenue are not incorrect, as the Prime Minister conceded, does the Prime Minister think it is appropriate that the average dairy farmer paid half the level of tax that is paid by a married couple earning only superannuation?
Well, I just do not accept the proposition put up by the Leader of the Opposition. As I said, to quote DairyNZ, which probably has a pretty good idea of these things: “on average approximately $300 million tax is paid per year by dairy farms,”. The average dairy farmer is paying about $28,000 in tax, I think I saw in the release.
Dr Russel NormanDoes the Prime Minister agree that what stands behind the figures on the front page of the Dominion Post today is that a lot of farming in New Zealand is done for capital gains, and that is where a lot of the income comes from, and that under our current tax arrangement, there is no taxation of those capital gains?
It is not true, actually, that there is no taxation of capital gains in New Zealand. If someone buys a farm with the intention of selling it, then that will be subject to capital gains tax. It is not subject to capital gains tax if they are undertaking the farming business, and that is typical of many industries in New Zealand.
Stuart NashWas the Minister of Revenue correct in his answer to written question No. 2383 when he stated that the total tax paid by the dairying, other livestock farming, viticulture, horticulture, and service to agriculture industries totalled $247 million for the 2009 tax year, compared with $486 million worth of tax for the mining industry?
I am sure that the Minister of Revenue is right. He provides the right answer to all these questions. But I say once more to the member that ever since Walter Nash was Prime Minister, we have been taxing people on profits, not revenue and turnover.
Does the Prime Minister stand by his answer to me, given in this House yesterday with regard to the fiscal impact of the last two Budgets, that “over the 4-year forecast period there will be an increase in net revenue of $1 billion.”, when the Budget papers released by the Minister of Finance in last year’s Budget show that the net fiscal impact over 4 years will be a loss of $1 billion in revenue?