Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill

Thank you, Madam Speaker. I present a legislative statement on the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill.

ASSISTANT SPEAKER (Hon Jacqui Dean): That legislative statement is published under the authority of the House and can be found on the Parliament website.

Thank you again, Madam Speaker. I move, That the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill be read a first time.

As we continue to deal with the unfolding COVID situation, the Government is doing all it can to protect the lives and livelihoods of New Zealanders. This bill is about ensuring the Government’s support for the community can continue. Managing the tax system is an important function of any Government at any time. But at a critical time for the health of our people and our economy, this is absolutely vital. Although New Zealand has relatively strong tax settings, it’s important to maintain the tax system and ensure that it continues to be fit for purpose. Maintaining the tax system helps maintain the revenue base, which helps fund the services and functions many New Zealanders depend upon. It also provides clarity and certainty. Changes in the interpretation of the law can introduce unfairnesses, inefficiencies, complexities, and uncertainty, which the tax system should respond to. Proposed changes in this bill will uphold the integrity of the system.

Changes can also arise as circumstances change. The tax system must, for example, adapt to changing technology. Business practices change too; so must the tax system if we want to minimise compliance costs for businesses. So some proposals in this bill relating to this generally aim to make life a little easier for businesses. A good example is that of cryptoassets. The designers of our tax system never contemplated cryptocurrencies and other types of cryptoassets. We want to ensure fairness in the tax system. We recognise that cryptoassets have a growing role in the economy, so we want to ensure that people using cryptoassets to invest, develop new products, or raise capital are not obstructed from doing so because of our GST rules.

We also strive to remove distortions in the tax system, and the bill, therefore, proposes that cryptoassets be excluded from GST imposed by the GST Act and from the financial arrangement rules within the Income Tax Act. Cryptoassets may, of course, still be subject to income tax on disposal. The bill also proposes allowing GST-registered businesses who raise their funds through issuing cryptoassets with similar features to debt or securities to claim input credits for their capital raising costs.

A further measure aimed at removing a distortion is a proposal to zero rate the domestic leg of cross-border transportation of goods. Currently, the transportation of goods to and from New Zealand is zero rated, as is the transport of goods within New Zealand, provided this is part of the international transport of goods and done by the same supplier. The bill expands the zero rating to accommodate subcontracting arrangements for transport within New Zealand. This levels the playing field and removes incentives to pick one transport carrier over another. This change will broadly align New Zealand rules with those of Australia.

The bill also proposes improvements to the GST apportionment rules. These rules are used to determine GST input tax deductions, where an asset is used partly to conduct a GST-registered business and partly for a private or exempt use. The current rules prescribe a formula for apportionment. One proposed change would reduce compliance costs for smaller GST-registered suppliers by allowing them to apply to the Inland Revenue to use an alternative apportionment method.

Another proposal is aimed at avoiding overtaxing the sale of appreciating assets that are used for both business and private purposes. This would be achieved by allowing a deduction that more correctly reflects the non-taxable use of that asset.

In striving to maintain the tax system and ensure it imposes minimal compliance costs, it’s necessary to keep up with current business practice. Current GST rules stipulate that invoices must be a document, and they prescribe a format for that document. The rules also require registered persons to create and retain tax invoices for taxable supplies and also credit notes and debit notes for adjustments to taxable supplies. We’re proposing to replace the requirement for the issue of documents with the requirement for the provision of information with no prescribed formats. This better aligns with the electronic invoice and record systems that modern businesses use.

The bill proposes amendments to the rules relating to groups of companies. An amendment introduces the term “GST group” for a group of companies that choose to register as a group under the GST Act. Other amendments clarify that the application of GST rules for the representative member is the maker and receiver of supplies for a GST group.

Also on the theme of clarification, the bill proposes a series of technical amendments to the fair dividend rate foreign currency hedge rules to improve their functionality from a practical perspective and reduce compliance costs for eligible taxpayers with a large number of hedges.

Circumstances change, as I said earlier, and the tax system must move to reflect that. An obvious example is that, of course, of COVID-19 and now the Delta variant. The bill consequently proposes removing the time limit from the COVID-19 information-sharing provisions that apply between the Inland Revenue Department and other agencies. This is designed to ensure that agencies are able to continue sharing necessary information throughout the pandemic. This, of course, enables initiatives that support New Zealand’s recovery. An important part of the tax system is to uphold the integrity of the tax system. The bill proposes a series of measures to improve the integrity and fairness of local government taxation. It will prevent local authorities effectively transferring the benefit of their tax exempt status to their, sometimes trading, taxable council-controlled organisation. If you don’t remove that, you create a competitive disadvantage for companies that are competing with those council-controlled organisations.

The bill proposes allowing the use of tax pooling to satisfy a tax obligation where there is no existing tax assessment or the tax obligation has not been quantified. The proposal includes safeguards to avoid incentivising the non-filing of tax returns by taxpayers.

The bill also introduces penalties on the sale and acquisition of sales suppression software. I didn’t, until recently, even know that this existed. But sales suppression software changes the point of sale data collected by a business to understate or hide sales revenue. This enables businesses to avoid paying the correct amount of GST and income tax. Such software poses a serious risk to the integrity of the tax base and is unfair to other taxpayers.

Moving on to other matters, the bill proposes 11 New Zealand charities with overseas charitable purposes be granted overseas donee status and be listed in schedule 32 of the Income Tax Act 2007 with effect from 1 April 2021. It also extends the donee status of an existing trust until 31 March 2025. The bill also removes eight charities whose activities have ceased.

The annual task of setting the income tax rates for each year is perhaps the most fundamental aspect of managing the tax system. It’s necessary to provide clarity and certainty to taxpayers, employers, and payroll developers. We’re not proposing any change to the annual rates of tax for the 2021-22 tax year, as currently specified in the Income Tax Act 2007.

In conclusion, the bill we are considering today makes crucial improvements, which will ensure that the machinery of the tax system continues to run efficiently. It is a bill about the prudent management of the tax system. I nominate the Finance and Expenditure Committee to consider the bill, and I look forward to the House considering the bill and examining it, and I commend it to the House.

The question is that the motion be agreed to.

Well, thank you, Madam Speaker. It was nice to see the Minister of Revenue finish where he perhaps could have started. It’s not often people say these words, but all I can say about this bill is thank goodness for tax accountants and for the benefit of Barbara Edmonds’ tax lawyers, because there’s about a hundred pages in this bill and it is a notoriously complex piece of policy work. I know that my colleagues who are on the Finance and Expenditure Committee will do an excellent job in analysing this bill and scrutinising it, and I’m sure they will come back to this House in due course recommending sensible improvements. But the real heroes of that work will be the advisers, the Inland Revenue policy staff, and our tax accountants and lawyers.

💬 Hon David Parker: And the committee members who sit through it!

That’s right. I must say, I was quite staggered at the fact that the Minister of Revenue spent nearly 10 minutes talking about this but did not mention the policy elephant in the room which this bill is giving effect to. He talked about the health of our economy and how this bill will support it and maintaining the tax base, but what he didn’t say was what the Government is doing with this bill, and that is increasing the top rate of tax for those who earn over $180,000. So we’re taxing the rich.

My friends on the left will say, “Well, isn’t that a good thing?” Well, I think it’s worth pointing out once again, as we have done in this House many times, where the income tax burden actually falls: on earners. The latest information that Treasury has on its website suggests that the bottom 48 percent of income earners in this country pay—that’s 48 percent—just 8 percent of income tax.

💬 Hon David Parker: What about GST?

Oh, I’ll come to GST and wealth transfers in a minute, Mr Parker; I appreciate your enthusiasm for the subject, and I do appreciate there is an intellectual and philosophical difference about the merits of the amount of tax that’s taken out of taxpayers’ pockets. So 48 percent of income tax earners pay 8 percent of income tax, and the top 12 percent of income tax earners pay nearly 50 percent of the income tax base. I think that’s fair. I’m not saying that’s wrong.

Those data actually exclude the sort of wealth transfers that we have through things like Working for Families and independent earner tax credits. And it is true that depending on how one measures the GST, whether it’s a flat tax, a regressive tax, or a progressive tax—we can argue that till doomsday—the higher-income earners on a dollar for dollar basis will also pay more in GST. So I think that’s fair.

I don’t think it is fair to continue to fleece upper-income earners out of envy. And what we have seen in these very straitened times, particularly through COVID, where the Government is spending an eye-watering amount of money priming the economy—that’s the term that’s used—is that stimulus usually involves two things. One is Government stimulating the economy through extra spending and the other way is to offer tax cuts. So we’re not having a tax cut here. We’re not even having a tax threshold change, a question that was debated by this House only a month or so ago through Simon Bridges’ member’s bill to adjust tax threshold changes, and in the debate I pointed out that a nurse on the average salary at Auckland Hospital is now paying nearly $2,000 a year in tax, not because they are earning more—they’re paying more for that in any event—but nearly $2,000 in tax because they are now in the top tax bracket. Ten years ago, they were 10 percent below the top tax bracket. Now they’re 10 percent above it because the tax bracket hasn’t moved but their incomes have.

So there’s an enormous amount of money already being taken out of the pockets of hard-working taxpayers, and this bill will take more. How much more? We don’t know, because the Minister didn’t even mention that fiscal elephant in this bill. I think when it was first announced, we were talking somewhere in the region of hundreds of millions of dollars. Well, that makes that, this change—what?—three or four days’ worth of lockdown costs that the Crown is paying.

What we know about tax is that it usually disincentivises things. It disincentivises things like, I don’t know—taxes on cigarettes and alcohol are there so people smoke and drink less. Well, taxes on—we had a debate this afternoon on rebates for electric vehicles and taxes on internal combustion engine vehicles. Why? Because the Government wants people to buy fewer of them. We have taxes on—well, they may call it something else, but capital gains on houses. Why? Because the Government doesn’t want well-off people to buy lots of houses; they want to equally distribute that through. So if we know that taxes disincentivise certain behaviours, why are they then neutral on the fact that increasing income taxes disincentivises the earning of income? Because it does. Now, the Government may well say, “Oh well, it’s only 33 percent to 39 percent and it’s only on income over $180,000.”, but it will have a number of negative effects, not the least of which is tax planning will come back into this country—tax planning that was eliminated by the previous Government, the National Government, that lined up the top rates of trust income and personal income tax, effectively making redundant all of the trust arrangements that Mr Parker’s legal colleagues in Dunedin were setting up under a previous Labour Government. They will come back when this is given effect to.

What are the other things we haven’t heard about in this bill? Well, the Government has announced that they’re going to remove interest deductibility on residential property rentals, and that’s going to come in in two weeks.

💬 Hon Gerry Brownlee: Less than that.

In two weeks, and we have seen nothing of the structure—yes, that’s right, Mr Brownlee, it’ll be nine days that that becomes effective and we’ve seen nothing of those details. I don’t know if the Minister is intending to introduce a Supplementary Order Paper on this bill in order to give effect to that, but by the time we see it, whether it’s that or a new piece of legislation, it will effectively be retrospective taxation, and that is wrong. We’re hearing about what the Minister described as the “removal of an exemption”, some kind of loophole where councils are putting tax exempt strategies in place for council-owned companies. Well, all that will do is increase the ratepayer burden because they need to get their income from somewhere, and if their after-tax rate of return on the council-controlled organisations goes down, they will have to increase the general rate in order to compensate. So this change is going to take more money out, not only of the pockets of hard-working taxpayers but of hard-working ratepayers, often the same people. Very little detail about the brightline test anomalies. We’ve got one fix in here, but there’s about 10 others that haven’t been addressed.

Look, there are some good things in here. I think the cryptocurrency clarification on GST is a positive move, albeit that I note—I think I heard the Minister say that there would still be tax on the profit of disposal of cryptoassets, which is interesting. If it is a form of currency and a measure of value, why would one then be taxing any perceived profit on that?

I’ll finish by commending one part of the changes to the donee status, and that is for the Le Quesnoy trust, a fantastic trust that is raising money for a museum in Le Quesnoy, a place that is actually on the wall here, one of the great battles New Zealand participated in in the Great War. I must say, though, I’m still not sure why donee status is an issue for primary legislation. I know the Legislation Design and Advisory Committee talked about that; in fact, it may have done so at my request as Minister of Revenue because I didn’t believe that those sorts of minor changes should be in primary legislation. They maintained that it should. But, actually, it’s a good thing that the Le Quesnoy donee status is extended till 2025. But, overall, we cannot support this bill.

Thank you, Madam Speaker. It’s a pleasure to rise on behalf of the Green Party on the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. I just want to pick up on a couple of points that were raised by the Hon Michael Woodhouse in his remarks then in opposition. One of the things that he said was that this bill increases the top tax rate on people who are earning over $180,000, and, of course, it does do that. And then he said we’re taxing the rich, to which my response has to be: if only. If only we were actually taxing the rich, because we do not tax wealth in this country at the same rate at which we tax work. So we are taxing high-income earners; that is an entirely different proposition from taxing the rich, because that is a distinction between wealth and work that we still have not gotten to grips with in this country. This bill does a lot of things, but that is something that it does not do.

One of the things that he mentioned was that the bill is over 100 pages long—it’s 177 pages. It has 204 clauses. It does many, many things. My issue with this bill actually is that it doesn’t fundamentally—in all of that kind of worthy stuff that it does do, it doesn’t actually do the thing that is probably most important right now, which is to ensure that, given what has happened in our economy, not just over the last 20 years but in particular over the last 18 months of the COVID crisis, it addresses the fundamental inequalities that remain in our tax system between people who work and people who own, between wealth and income. It fundamentally does not address that challenge.

And when you consider what has happened over the course of the last 18 months in response to the COVID crisis, there has been a massive expansion of capital in our economy, and I’ve supported that and I think that that has done wonders, given the incredible pressures on our economy and the global economy as a result of the pandemic crisis, but that monetary expansion has led to a huge inflation in asset prices, in particular in property, and that is because of the preferential rate at which those assets are taxed, as opposed to the productive side of the economy. And so an existing—which has been around for many decades—fundamental design flaw in our economy has been exacerbated as a result of the COVID-19 economic crisis, and we are not yet addressing that exacerbation or the underlying causes of it.

People who own property in this country saw the value of their property increase by an average of $200,000 during the last 12 to 24 months—an average of a $200,000 increase in the value of that property, right? During a global pandemic, during an extraordinary kind of economic upheaval and turbulence, we have seen those asset prices expand. I mean, the old joke has been around for a while now: if I really wanted to earn money, I’d be a house. I’d stop working and I’d become a house because I could earn way more through just unearned capital gains than I ever could just working for a living. And we’ve actually seen that get much worse.

The other thing that Michael Woodhouse said in his comments then was he said that tax planning will return to this country. If he thinks that tax planning ever went away then he’s sadly mistaken. And he referred to how trusts were diminished as a result of tax changes. Actually, trusts were diminished in this country as a result of changes that were introduced because of the Panama Papers scandals and the fact that people were hiding their wealth inside trusts and those trusts had no look-through provisions and you couldn’t see what was going on inside those. And credit to the previous National Government, because they changed the law on this one, and the vast majority of those trusts vanished in under a week because people who had that wealth and who were hiding that wealth—the moment there was some transparency, those particular tools lost their flavour and they disappeared. Now, that was a good thing. That wasn’t a change of tax law; that was a change in transparency law so that people could actually see what was going on there.

I have to say that, right now, we know that there are people in this country who are doing it incredibly tough—incredibly tough. So whilst the lockdown—there are people who, like myself, can have an easy time of it because we’re well supported, we’ve got the resources to be able to get through it. There are families who are still confined, many, many people to a house, multiple people to each room; people unable to get secure incomes still, despite the support mechanisms that are available to them. It is, I think, deeply unfair that we allow a situation to perpetuate where people who are well off, and getting better off as a result of the economic stimulus that we are putting into the economy, are not contributing back in order to enable those people who are really doing it tough to be fully supported to get through the situation. So when we reflect on the team of 5 million—and the health response has been phenomenal—we are not acting as a team of 5 million when it comes to the equality of the contribution that each person is making according to their means to be able to get us all through this in one piece.

So the bill—I have to say the Green Party will be abstaining on this bill, because it is a confidence and supply matter—it’s a taxation bill—and it does do many good things. It doesn’t, I have to say, deal with the fundamental challenge that is currently present in our economy. So whilst we’re not opposed to most of the measures that are contained within it, we also can’t support it because there are so few opportunities in any parliamentary term to fundamentally address some of the major issues to do with our tax system, that—in this case—we also cannot support it; not because of what it does but because of what it does not do.

Fundamentally, we think that the people who are really doing it tough as a result of the pandemic and the current lockdowns need to supported, and that actually all of us have the opportunity to do so, and this bill—I’m afraid—doesn’t measure up to that standard.

So I do commend the Minister and the agencies who have done a huge amount of work. Like the previous speaker, I commend the select committee who are going to have to work through what is a very weighty bill. I think, actually, maybe one thing that the select committee may want to consider is the idea that we actually do tax the rich, rather than continue not to and continue to tax only people who earn as opposed to people who own. Thank you, Madam Speaker.

Well, that was a very interesting speech from the co-leader of the Green Party, where he was mounting a fairly stinging attack on the absence of wealth tax in this particular bill, and then reached the extraordinary conclusion that the best thing he could do was simply abstain from taking a position on it. Now, that is the sort of leadership that the country doesn’t need. Let me also say, on the issue of a wealth tax, wealth is one of those things that is not tangible until it is realised, and so the idea that you would tax something that’s intangible is pretty abhorrent. It essentially means that you would have a standstill situation for a great deal of the economy.

When we saw the start of this debate, the Minister began with a quiet sort of rendition of how hard it is for the Government dealing with the COVID-19 situation. Well, no one is going to disagree with that, but this bill is about the mechanics of how we get our way out of that, at the same time making sure that life is not too difficult, too pernicious, and too discouraging for New Zealanders.

There are a couple of things I want to speak about here that stand out for me in this bill. The first one is the issue of the minor changes, effectively, to the brightline test. The current Government expanded it to five years, and now they’ve got it out for a longer period of time. It is, at that length of time, a splendid failure. James Shaw just stood in the House and said that in the last 12 months, the average house price in New Zealand has risen by over $200,000. That’s his figures. Now, if someone was a speculator and they decided to buy a house 12 months ago, and then they sell it now and they take their $200,000 profit and then pay their tax on it, they walk away with about $140,000. So where has the brightline test been shown to work? It doesn’t. All it does is confirm that if you’ve got a scarcity of supply, you’ll have an elevation in price, and if there’s a tax component inside that price, it will go up even higher.

I am disappointed that the Government hasn’t quite worked that out, hasn’t recognised that around the whole issue of housing, tax is a problem. Just take the price of a brand new home. Let’s say it’s on average $700,000. It’s cheaper than that in some parts of New Zealand. In some parts of New Zealand, it’s cheaper, but on average. It certainly is for our fellow New Zealanders who are locked down in Auckland for the fifth week running. That’s the sort of price they’d pay for an average house up there, possibly a little more—possibly more.

💬 David Seymour: Seven hundred? You’ve got to be kidding.

What was that? You’d love to buy a house up there for $700,000? Just hear me out on this, because it makes the example easy. In that $700,000, how much is taken by the Government in GST? Over $100,000.

💬 David Seymour: A hundred and five.

A hundred and five. So let’s assume that everybody who puts an input into that building, that house, pays tax on their earnings. How would you calculate that? And then assume that the contractors who are building these houses also want to run profitable businesses that pay tax.

💬 David Seymour: No, no, surely not!

Well, you’re probably right. My colleague from the ACT Party is probably right. If you follow the James Shaw prescription, they should all be doing it for nothing, and then the Government would do it for free. We saw what a huge, massive, totally capable developer they’ve been with the KiwiBuild debacle. So if you look at that, I think it’s not hard to see that tax is a very important thing in the way in which our society works. The idea that it can be used in a pernicious way to create fairness is totally wrong—totally wrong.

My colleague Mr Woodhouse raised the issue of there being no mention in here of the abolition of the interest deduction on rental properties, which is going to come into effect in nine days’ time. So no one at the moment knows what the new rules are, but here’s how it works. If someone buys that property—and they know now they’re up for the brightline test. They know too that anything they earn off that property they’re going to pay some tax on. That’s all fine. But why would you take away a legitimate business expense: the interest that’s paid on the capital?

We’ve got a housing crisis in this country. We’ve got a rental crisis in this country: $120 on average increase in rents in the last four years. Maybe that’s because it reflects a percentage of the $200,000 price increase that Mr Shaw just spoke of. What it tells us, though, is that even with that rental increase, anybody with a house now that has the average value currently in New Zealand is making a loss constantly. So what the Government’s come along to do is say, “Well, some of the input that once could be written off no longer can.” Well, where does that leave someone? All it leaves is pressure upward on rents, and that’s exactly what we are going to see in the next 12 months. It is a dreadful situation and it is, again, this crazy idea that somehow a tax system used in a pernicious fashion can advantage people; it can’t. The people who are going to pay for this will be the people who are least capable of paying for it—some of the people who Mr Shaw talks about who do not have the opportunity to gain the advantages of a wealth base in this country. So this is not a clever piece of work in those two aspects.

As we have heard, there are many, many aspects in it, and some of them are good. I think the changes around cryptocurrency is going to be an interesting discussion for the select committee, because I don’t think all of the implications for any of the decisions currently around cryptocurrency have been fully thought through, and I think we’ll see a lot of change in that regard in years to come. Like my colleague, I think it is a good thing to see that the Le Quesnoy charitable trust is able to receive the deductions from here in New Zealand; that’s a positive thing—it’s a good thing. And there are other changes throughout here that I think will be useful because they come under the category of: there are minor changes that need to be made at any time.

As I’ve said before, this piece of legislation is the engine for how the Government gets its revenue in the future. But it is not a horse that can be flogged to death, and so it must be measured against the quality of expenditure that the Government is undertaking at any particular time. Simply saying that we’ve been burdened by the spectre of COVID-19 and that lets us do all sorts of things without a great deal of scrutiny or accountability is completely unacceptable. And I will finish a little early on those remarks.

Thank you, Madam Speaker. The other side of the House seems to be having a field day on outdated economic theories. The idea that tax doesn’t have an effect on behaviour is pretty much debunked.

Look, I’m really looking forward to being part of a select committee that will dive deep into these various tax policies, including the cryptocurrency. It is an indication of the fact that the tax law has to keep up with new technologies, and dealing with cryptocurrency as quasi-money will be interesting. Of course, if you’re trading in it, like any dealer, you’ll pay income tax on profits.

But, look, it’s a substantive bill making some useful updates. I commend the bill to the House.

Thank you, Madam Speaker. It’s good to have an omnibus tax bill before the House, because what I appreciate about omnibus tax bills are the remedial matters that are in the bill. At this point, I’d just like to bid a happy birthday to the member across the House. It is these small tweaks and fixes that help to keep the lights on in our tax world and help keep the tax system working efficiently. Remedial matters are sometimes brought to the attention of IRD officials by the private sector. They are generally niggly matters that don’t meet the policy intent and sometimes have adverse impacts on taxpayers. For example, I can see, in clause 155 of the bill, it provides that a commissioner’s decision to reopen a time-barred GST return is treated as a disputable decision. At face value, this is a good amendment, as it allows a taxpayer the ability to challenge the commissioner through the disputes process rather than through a judicial review.

Quickly, I just want to touch on one other policy matter, and that is the inclusion of 11 charities to Schedule 32 of the Income Tax Act. These charities have probably been waiting a long time and have been looking forward to this day. They would have been subject to some vigorous scrutiny by IRD officials, and tonight they are one step closer to obtaining donee status for their donors. I look forward to scrutinising this bill at the select committee, and I commend this bill to the House.

Thank you, Madam Speaker. I rise on behalf of ACT in opposition to this tax bill. The number one reason is not for the many minor tweaks, the spring cleaning that needs to be done to a taxation system each year by a bill such as this—a lot of that is well-supported, sensible stuff: making sure that GST continues to function, making sure that the emerging technology of cryptocurrencies is fitted into New Zealand’s taxation system. That’s good stuff. But what is unforgiveable and unsupportable by ACT is the increase in the top tax rate to 39 percent.

Let’s just put this in a little bit of perspective. Now, James Shaw, he got up and he huffed and he puffed and he told us this, then he told us that, and then he said the Green Party was going to—wait for it—abstain! Abstinence makes the heart grow fonder for Green Party co-leaders, it seems! They can’t decide if they’re coming or going. The ACT Party says it is crystal clear. When James Shaw says it’s time to tax the rich, he doesn’t even know what bill he’s speaking on, because this income tax bill does not tax wealth; it is all about taxing income. And what this bill will do—introducing a 39 percent tax rate—is simply punish people who work hard, save, invest, and try to make tomorrow better than today. If James Shaw wants to tax the rich, if the Labour Party wants to tax high-income earners, they are not going to do it by adding this new tax rate. And one reason for that is very simple: they already are.

People might be surprised to know how much tax is paid by the top 9 percent of income earners in this country. I wonder if anyone in the Labour Party wants to give it a guess. How much of the income tax in this country is paid by the top 9 percent? Does Duncan Webb know? He’s slouching down in his chair. Can Duncan Webb tell us how much of the income tax is paid by the top 9 percent of income taxpayers? No, Duncan Webb doesn’t know. Anyone else on the Labour Party benches? Angie Warren-Clark? What about the Minister of Revenue? Does David Parker know how much of the income tax is paid by just 9 percent of taxpayers? Is he going to tell us?

💬 Hon David Parker: I listened to Michael Woodhouse just before.

He listened to Michael Woodhouse. So he knows. Can he tell us how much it is? He can’t remember. He’s getting forgetful. Well, let me remind him: 42 percent of all income tax in this country is paid by just 9 percent of taxpayers—or it was. And how much of the income tax is paid by the bottom 48 percent of taxpayers?

💬 Dr Duncan Webb: Too much.

The bottom half of taxpayers pay only 8 percent of all of the income tax. And Duncan Webb says it’s too much. Duncan Webb wants the bottom half of taxpayers—he wants half of New Zealanders—to pay less than 8 percent tax. Is that what Duncan Webb is saying? Yeah, it is.

💬 Hon David Parker: Tell us about GST!

Oh, and he says, “Tell us about GST!” Well, let’s think about this. How much GST is going to be paid by the top half of income earners? The revenue Minister will tell us they’re earning more, they’re spending more; so I would guess they’re also paying more GST. But nice try from the revenue Minister.

We don’t need to raise the top rate of income tax, because the top 9 percent of taxpayers are paying nearly half the income tax in New Zealand, and the bottom half of taxpayers are paying only 8 percent of the income tax. Or they were; that was last year. This year, this Labour Government has decided that it is not punishing people who work hard, save, invest, study, and get ahead—that they’re not being punished enough. So now they want to introduce a new top tax rate just to really send the message that if you do the things we ask kids in New Zealand to do: if you go to school, if you listen to your teacher, if you do your homework, you get good grades, you turn them into qualifications, and if you start a job, and if you work hard and if you put some money away and if you save it and invest it carefully—if you do all of those things, the Labour Party’s message is “We’re here to take more money off you with a top tax rate.”, and is it there to raise more money?

Maybe they’re putting this new tax rate there because they want to raise more money. Can we ask the Minister of Revenue? Now, let’s put this in context: the Government spent $120 billion—$120,000 million—last year. Can we ask the Minister of Revenue: how much extra money does he think he’s going to raise by putting in this new tax rate?

💬 Hon David Parker: It’s in the Budget.

It’s in the Budget. Well, what it said in the Budget was, optimistically, $300 million or $400 million plays $120,000 million. You note that the Minister of Revenue, he didn’t want to say because it’s so embarrassing for the Labour Party. They’re putting in place this new tax, not to raise more revenue, because it’s barely going to do that. They’re putting in place this new tax just because they want to put a little bit more tall poppy syndrome in the tax code. That’s what it’s all about.

Well, there is another way. Instead of a Government that constantly seeks to divide people, commodifying us into identities, and divide wealth with new taxes and new regulations, what if we had a Government that said, “We are going to unite New Zealanders behind good ideas. When people do well, when people make tomorrow better than yesterday by applying new ideas and new investments and provide people with better goods and better services more efficiently, we’re not going to put an extra tax on them. We’re not going to punish them; actually, we’re going to say, ‘That’s pretty cool. How do we get more of that activity so that all New Zealanders can live in an environment where we get wealthier?’ ” That would be a better way.

That’s what a Government that truly wanted to unite New Zealanders behind good ideas and make this country more prosperous would do. We would have lower, flatter taxes, and do you know what else we’d do? We’d open up opportunity so the next generation have a pathway to be in a property-owning democracy, and would we do that by introducing new taxes? Not like this Government. This Government have just decided to remove interest deductibility from landlords’ mortgages, and what are they going to achieve by that? Well, the Prime Minister says that they’re going to tilt the balance towards first-home buyers.

Now, let’s just think through the logic of this. They are increasing the tax bill for landlords in a tight rental market. I wonder who landlords are going to pass those extra taxes on to. Could it be tenants? Now, let’s just think about this: who are tenants and what are tenants often doing? Trying to save for a first home deposit. The Labour Party is so madly manic with taxing people that they have just scored yet another own goal. They’ve actually decided that the solution to the housing market is to tax it more. Well, if you could tax your way to prosperity, the Soviet Union—Duncan Webb’s buddies; comrades—would have won the Cold War. But, unfortunately, nobody has ever managed to tax their way to prosperity.

The only thing that they’re achieving by putting more taxes on landlords is that they are going to increase the costs paid by tenants and decrease the savings that tenants have to put a deposit on their first home, and that’s what happens when you have a tax-mad Government—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order!

—on the loose.

ASSISTANT SPEAKER (Hon Jacqui Dean): Order!

Madam Speaker—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order!

I know you’re enjoying this speech—

Order! The member will resume his seat. [Interruption] The member will resume his seat. [Interruption] The member will resume his seat. Thank you so much, I appreciate that.

The debate is interrupted, mostly by me, and set down for resumption next sitting day. The House stands adjourned until 2 p.m. tomorrow. Good evening.

Debate interrupted.

The House adjourned at 10.05 p.m.