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Sharples: Taxation Bill

Taxation (Annual Rates, Business Taxation, KiwiSaver, and Remedial Matters) Bill

Dr Pita sharples, co-leader, Maori party

Wednesday 12 December 2007

At the end of this month, all Ngāi Tahu whānui who have joined Whai Rawa will be eligible to receive the next distribution from Te Runanga o Ngai Tahu.

The distribution of some $250 is twice as much as last year.

For every dollar that a member contributes to their savings under Whai Rawa, they will receive a dollar in matched savings from Ngai Tahu.

And it gets even better for Ngai Tahu rangatahi, youth, who are matched at a ratio of 4:1.

So if one of their young people under sixteen years of age saves fifteen dollars, Ngai Tahu will match it with sixty dollars.

This is Maori enterprise and success at its absolute best. It’s a programme designed to provide a base level of savings for all registered Ngai Tahu members, as well as supporting and incentivising a culture of savings and asset buildings.

At the end of July 2007 there were over 6300 members and over 1.5 million dollars invested.

But the entrepreneurial capacity of Ngai Tahu is not only confined to their steady membership and the fund size of their medium to long-term savings scheme.

Te Runanga o Ngai Tahu’s influence is also felt in this Bill, the Taxation (Annual Rates, Business Taxation, Kiwisaver and Remedial Matters) Bill.

Ngai Tahu specifically lobbied to ensure there was creativity and clarity around the retirement scheme contribution tax. Their efforts have been rewarded through the provisions that Ngai Tahu have promoted, which means contribution tax can be directed at source, rather than 6300 members having to make their own individual contribution.

We commend Te Runanga o Ngai Tahu for their efforts - and we acknowledge also the sponsor of this Bill also, Hon Peter Dunne, for being willing to do what was necessary to achieve simplicity and clarity.

We also note that this Bill enables the retirement contribution to be offset by any imputation credit or Maori authority credit.

These two initiatives, we believe, will avoid setting up a whole new raft of compliance issues which can only run the risk of creating non-compliance breaches at an individual level.

The bill we are debating today, sets the annual income tax rates for the 2007/08 year, introduces amendments to encourage voluntary compliance with tax obligations and amends other acts and regulations such as the KiwiSaver Act 2006.

In many respects there are some positive proposals included within the Bill.

We welcome the tax credit for research and development and support the changes made through the select committee stage to make the eligibility criteria for clarity purposes and to make them less restrictive.

We believe it is a very positive initiative to establish a tax credit for science and technology based research and development conducted predominantly in New Zealand by New Zealand businesses and we are confident that such support will pay dividends in the long run.

We support also the tax incentives for charitable donations. We accept the rationale of submitters who suggested that increasing the tax incentives will in itself, increase the opportunity for charitable giving. We will be interested to learn how the Inland Revenue Department will take this into account in its review of tax incentives, to be reported back by 31 March 2008.

The other major development that we wish to speak to in this Bill, is the recommendation that the minimum employee contribution be reduced to two percent to facilitate greater participation in the Kiwisaver scheme.

At the second reading of this Bill, my colleague Hone Harawira, revealed the results of the Marae Digipoll carried out just one month ago; in which it was disclosed that 84 percent of the thousand strong group polled, had decided NOT to join the Kiwisaver scheme. 84 percent.

And yet while there was such little interest in Kiwisaver, there was enormous interest in the issue of tax cuts – tax cuts being one of the highest priority.

We in the Maori Party are very interested in this whole concept of support for tax cuts.

Manaakitanga and rangatiratanga leads us to address the impacts for low-income taxpayers.

We certainly are of the view, that those people on lower incomes should carry less burden proportionally than those who are on higher income levels.

We know for instance, that 1.9 million taxpayers are on an income of $25,000 or less; that these people were paying $3.5 billion in tax; while the government is accumulating surpluses of $4 billion to $7 billion per year.

It is this group that should benefit from tax cuts.

Coming back to the issue of Kiwisaver,

And in so doing, I'm sure there would be a significant turnaround in the interest and uptake of Kiwisaver, and including by Maori.

We are pleased to note that following advocacy from the CTU, the National Distribution Union and the New Zealand Nurses Organisation, that the Minimum employee contribution is going to be reduced to two percent in order to facilitate greater participation in Kiwisaver.

The recommendations that came back from the Finance and Expenditure Select Committee duly included a minimum contribution rate of 2% of gross salary until 31 March 2010; 3% from 1 April 2010 and 4% from 1 April 2011.

While we are pleased that the recommendation for a lower contribution rate for Kiwisaver was accepted, we were disappointed that another recommendation from the combined unions, that under-eighteen year olds should be eligible for Kiwisaver – was not accepted.

And we did have to wonder at the evident flaws in the argument that opening up the door for people under eighteen might reduce incentives for young people to remain in education and training.

We have to ask whether this will be another piece of legislation which acts against the interests of our young people, just as, for instance, we saw with the Minimum Wage (Abolition of Age Discrimination) Bill which removed the words ‘age discrimination’ from the title of that Bill, and promptly did exactly that.

Like many of these multi-faceted Bills, there are some very positive changes included alongside the not so desirable changes.

We support the tax credit facility for Research and Development; tax relief for donations; tax exemptions for Tokelau and Niue Trusts; and the lower contribution rate agreed to for KiwiSaver.

But we have to once more, temper our support by asking the constant question – when are we going to see tax changes for the poor which will bring about justice for those who are not currently enjoying an enviable standard of living?

We wonder why the endless name changes are necessary.

For example, the terminology that has been associated with tax credits for families; In-Work tax credit; parental tax credit; Working for Families tax credits; Family assistance; Family support; Minimum family tax credit – just adds layers upon layers of confusion which makes the calculation of taxes even more inaccessible to the general public.

It is just as non-sensical as the logic around excluding eighteen year olds from being able to join up to KiwiSaver.

We will be supporting this Bill and we hope that some of the issues we have raised here tonight, will be given further consideration in the interests of the wellbeing and the wealth of all peoples of Aotearoa.


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