12. Hon JIM ANDERTON (Leader—Progressive) Link to this
to the Minister of Revenue
When the Government introduced legislation to increase GST to 15 percent on 1 October 2010, and tax cuts to take effect from that date, was it the Government’s intention that increased costs would be matched by lower taxes and/or other forms of compensation?
Hon PETER DUNNE (Minister of Revenue) Link to this
Yes, and that is why the Budget 2010 tax package provided compensation, for the vast majority of taxpayers, for the pricing effects of the GST increase. For taxpayers that was achieved through a cut in income tax rates. For those receiving main benefits, Working for Families tax credits, and New Zealand superannuation, compensation was provided through increased entitlements. I suggest that if any people are in doubt about their entitlements, they should go to www.taxguide.govt.nz to see for themselves how they benefit from the Budget tax package.
Did the Minister or any of his ministerial colleagues advise State-owned trading enterprises that they had the ability to exercise flexibility over the rate of GST charged on goods and services provided during September and billed in early October so that GST of 12.5 percent was added to invoice statements for that period, rather than GST at the rate of 15 percent?
This answer may take a little longer than usual, but it is a very important issue. The short answer is yes. In fact, based on a recommendation that we received from the GST Advisory Panel, the Goods and Services Tax Act was amended to allow suppliers to issue invoices up until 11 October in respect of supplies made prior to 1 October but to charge GST at the old rate. It is up to the supplier to elect to use the transitional concession. In so doing, they need to be aware that they would have to account for the GST earlier than if the invoice were dated on or after 1 October. I have become aware in the last few days that some power and utilities companies are not using the transitional provision, and, as a consequence, customers are being charged the new rate of GST for services that were supplied during the month of September. My strong advice to them is to take that up directly with those supplying companies, because, as I said, the Act was amended specifically to give a transitional arrangement that meant that those charges need not be made at that higher rate.
Is the Government concerned to learn that the State-owned energy company Meridian has chosen to impose 15 percent GST on the power it supplied to its Christchurch customers during September, one of the coldest months of the year, which included a 7.1 earthquake and 1,300 to 1,400 aftershocks so far, rather than exercise the lawful flexibility it had to impose GST at 12.5 percent?
Yes, and the point I made was that because that situation was predicted to be likely to occur, the Act was amended to ensure that there was a mechanism by which that additional charge could be avoided until 11 October. In the event that companies did not follow that, I say it is for the people who have been adversely affected—and I have become aware of a number of them—to take that up directly with the companies concerned, because I am aware of instances where those charges have been reversed.
Is the Minister aware that the overseas-owned Fairfax media company, owner of the Christchurch Press, decided to add GST at only 12.5 percent on invoice statements for services given up to 30 September, and is he willing to take up with his ministerial colleagues of State-owned enterprises and finance the question as to why a State-owned enterprise, Meridian, chose not to do the same thing and instead charged people 15 percent GST for services rendered in September?
There is a difference between the Fairfax case and the case the member referred to, simply because the Fairfax case relates to items that are supplied on particular days. I come back to the point that the law was amended to ensure that there was a transitional provision. I am concerned that that transitional provision has not been acted on, and I have indicated today that we will be looking into it.
Is the Minister seriously suggesting to the House that electricity supplied in September was not supplied on particular days, because I would have thought it definitely was; and the question then is: does it reflect well on the Government he supports that Christchurch citizens are being subject to this rip-off by a State-owned enterprise energy company?
The point I was making in respect of newspapers was that the supply of a newspaper occurs at a particular time. The same newspaper cannot be supplied day after day; it is a different article. Power and other utilities—[ Interruption] I raise a point of order, Mr Speaker. The member has raised a serious question and I am trying to give him the courtesy of a serious answer. I cannot make myself heard over some of the din opposite.
Mr SPEAKERThe member’s point is reasonable. I ask members to be more reasonable with the level of interjection.
The point I was making is that the supply of a particular newspaper on a particular day constitutes a particular supply. Electricity and other utility services do not come into that category. That is why the law was amended to allow for that transitional provision. That is the point I am making. If companies have chosen not to exercise that provision, then it is for consumers who have been adversely affected to take that matter up directly with them.
Stuart NashRegarding recent GST and income tax legislation, what does the Minister say to those in the Napier electorate when they ask why the 650 New Zealanders earning $1,000,000 a year or more have just received a tax cut of $1,000 a week whereas the 50 percent of Napier residents on or below the median wage get around $3 or less per week?
What I say to the member, to members of the Napier electorate, and to others who may have a similar view is that when we have a progressive tax system and we make changes based on the level of income tax that people pay, obviously those people who pay more will get a bigger cut and those people who pay less will not get as big a cut. At the same time, those people are also likely to be receiving other benefits such as Working for Families and other entitlements that boost their income.
I seek leave to table an invoice from Meridian that shows it charged 15 percent GST for electricity delivered in September.
I seek leave to table a document from Consumer New Zealand that says that the Inland Revenue Department has issued special rules that enable energy companies in particular to charge their customers 12.5 percent GST for September services.
I seek leave to table a document from Fairfax that points out exactly the way in which it is charging its customers only 12.5 percent GST for September services.
For the House’s benefit, can I inquire whether it is a newspaper clipping or an actual administrative document?