Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More
Parliament

Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 

Cullen Must Provide Urgent Answers on MP Tax Rort

Cullen Must Provide Urgent Answers on MPs' Tax Rort

Sunday 15 Dec 2002 Rodney Hide Press Releases -- Economy

ACT Finance Spokesman Rodney Hide said today that Revenue Minister Dr Michael Cullen must front up and explain the tax rort that he has had legislated for MPs' overseas air travel.

"As Minister of Revenue, Dr Cullen is charged with using his `best endeavours to protect the integrity of the tax system'. It's hard to see that Dr Cullen has done anything but undermine the integrity of the tax system in designing and legislating a rort that favours MPs over all other taxpayers.

"At issue is who should pay the tax on the subsidy on MPs' overseas air travel. The subsidy covers up to 90 percent of the cost of the flight for senior MPs and ex-MPs depending on their length of parliamentary service. The taxpayer pays about a million dollars Fringe Benefit Tax a year on top of the subsidy.

"The problem is that MPs and ex-MPs should be paying tax on this perk at Cullen's top rate of 39 percent through PAYE, not the taxpayer having to stump up with the FBT. That's because the perk is technically a discretionary payment and not a contractual one.

"But the Standing Orders Committee on which Dr Cullen sits reworked the Remuneration Authority (Members of Parliament) Bill to, among other things, shift the burden for the tax of the perk firmly and squarely on the taxpayer. The move was a cunning one that was neither explained in the Committee's report nor mentioned in the Minister's speech. And it is hard to discover in the Bill itself, because the effect can only be understood by carefully tracing how this Bill changes obscure provisions of the Income Tax Act.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

"The Bill puts MPs' and ex- MPs' and their partners' `travel, accommodation, attendance or communication services' on the same footing as the Governor-General's salary - that is, not subject to PAYE.

"Exempting the Governor-General's salary is an anachronism; exempting MPs' overseas travel is a legislated rort. The Bill then makes the travel subsidy subject to Fringe Benefit Tax. The effect is to shift any liability for tax to be paid away from MPs and back on the taxpayer. The perk is again tax-free to MPs.

"We now have one rule for MPs and another for all other taxpayers. The Minister of Revenue's duty is to close the tax loopholes to ensure the tax system applies equally to all - not open up loopholes to MPs' advantage.

I will be asking Dr Cullen through Parliament just what role he and his officials played in designing this rort. I will also be interested to learn when Prime Minister Helen Clark first realised what was going on and what she makes of it. Technically, Dr Cullen and the Prime Minister have until the New Year to answer my questions but I am sure given the seriousness they will be keen to answer them this side of Christmas," Mr Hide said.


For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines


Gordon Campbell: On The US Opposition To Mortgage Interest Deductibility For Landlords


Should landlords be able to deduct the interest on the loans they take out to bankroll their property speculation? The US Senate Budget Committee and Bloomberg News don't think this is a good idea, for reasons set out below. Regardless, our coalition government has been burning through a ton of political capital by giving landlords a huge $2.9 billion tax break via interest deductibility, while still preaching the need for austerity to the disabled, and to everyone else...
More


 
 

Government: Concerns Conveyed To China Over Cyber Activity
Foreign Minister Winston Peters has confirmed New Zealand’s concerns about cyber activity have been conveyed directly to the Chinese Government. “The Prime Minister and Minister Collins have expressed concerns today about malicious cyber activity... More

ALSO:


Government: GDP Decline Reinforces Government’s Fiscal Plan

Declining GDP for the December quarter reinforces the importance of restoring fiscal discipline to public spending and driving more economic growth, Finance Minister Nicola Willis says... More

ALSO:


Government: Humanitarian Support For Gaza & West Bank

Winston Peters has announced NZ is providing a further $5M to respond to the extreme humanitarian need in Gaza and the West Bank. “The impact of the Israel-Hamas conflict on civilians is absolutely appalling," he said... More


Government: New High Court Judge Appointed

Judith Collins has announced the appointment of Wellington Barrister Jason Scott McHerron as a High Court Judge. Justice McHerron graduated from the University of Otago with a BA in English Literature in 1994 and an LLB in 1996... More

 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels


 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.