Taxation (Budget Measures) Bill 2010)
Taxation (Budget Measures) Bill 2010) - Second
Thursday 20 May 2010; 8.20pm
Rahui Katene, MP for Te Tai Tonga
Mr Speaker, there's a story to be told if one browses the net, to ascertain how the market and the press gallery are responding to Budget 2010.
And I want to share with the House an absolutely random selection of headlines gathered from cyberspace.
- Budget woes for property investors
- Biggest tax reform in 25 years
- Major incentives for investment
- Headaches for retailers over GST rise
- Income Tax slashed, GST to 15 percent
- Tax changes will keep Kiwis home
- Dollar responds positively to Budget
- More in most pay packets
- Budget politically safe but economically timid
- Tax package will bump up deficit
- Higher economic activity picked
- Experts praise tax cuts for all
And so it goes on.
Mr Speaker, nowhere in that list of analysis did I hear that this is a Budget which reflects the melodramatic hype that we have heard in the House today.
Sure we hear the words safe. We hear the words timid. But we don't hear that this is a tax swindle or a lost opportunity as those on the other benches might mutter.
In actual fact we heard the exact opposite - that this is a Budget which will crackdown on property investors and tax invasion; and we heard that this is a budget which will benefit all workers.
So much for this being a Budget which privileges the rich and leaves all other New Zealanders out in the cold.
The worst that could be levelled at the changes to the tax system will be that it is by and large fiscally neutral.
In effect this means that the increase in GST is offset by cuts to all personal tax rates, and the immediate rise of two percent in benefit payments.
All benefits including NZ Super and working for families will increase by 202pc to compensate for the increase in GST.
Two percent might not sound a lot, but it's two percent more than the former Government ever put out there.
This is something that we argued for, right throughout the lead up to Budget Day that no-one should be any worse off as a result of the budget tabled today.
I would have to say, it has been a hard slog, to bring the need to protect our most vulnerable to the forefront of this debate.
And to be frank, it has not been the easiest Budget to promote amongst our electorate.
But I have just come from a Maori Party film evening fundraiser where the people were really excited by this budget. They could see how it benefits them. I spoke to one superannuant couple who were so pleased to hear they would be getting around an extra $10 a week. That may not sound like much but to this couple it is like manna from heaven. This is much more than what the former government ever did for them.
It is all about perspective, about restoring balance and taking a long cool look at what will make the difference in order to create the promising financial outlook we all seek.
The Maori Party has spent many hours debating and debunking myths about the facts about tax.
And we know that in many respects this issue has much to do with perception - the perception of the punters about whether a tax cut or a rise in GST will directly impact on their lives.
We have been told by National that once all the measures are accounted for, the budget has almost exactly the same impact on average incomes of low, medium and high income households.
And in fact when we looked at a range of different scenarios in all scenarios the GST increase was offset by the income tax decrease. In simple terms, there was no loss of money.
In fact, what might be the breaking news of the day is that the biggest losers in terms of this tax package, are actually foreigners who lose through a combination of the tightening of tax on foreign investment, and also because they own a lot of property.
This is, in fact, a policy goal that we in the Maori Party campaigned on, to protect and preserve our land, to keep it from falling into foreign ownership. Something the former government never did.
The Budget will tighten investment property tax rules. One of the immediate impacts that will be achieved is that the "wealthy" families will not now be able to use losses from rental properties to become eligible for Working For Families.
Some might call this practice morally bankrupt - a claim we could also throw at those rental property investors who manipulate the system to dodge tax.
And in that light, another feature of this tax legislation is that it puts a stop to those who try to rort the system for their own benefit.
It seems a pretty hefty amount of money - $26.6 million dollars the next four years allocated to the IRD - but if it can put a stop to what surely amounts to theft and deception, then that has to be positive.
In fact it is almost incredible to believe that these measures, according to Revenue Minister Peter Dunne are expected to generate an extra $2.48 billion in the next four years.
And I want to return to the concept around the redistribution of wealth to invest in wellbeing - the pay it forward mentality.
Paying it forward is the concept of doing good for others to repay the good that has been done for you.
In effect, reforming the tax system can make our economy fairer, more sustainable and able to provide a better support for economic growth.
I think, therefore, about those who are hardest hit by this tax legislation - the commercial and industrial property owners who are hurt the hardest by the new depreciation rules.
I want to return to the discussion around Maori and Pasifika unemployment generated just before the dinner break.
We know that in the population aged 18 to 25 years, the numbers of Maori and Pasifika young people receiving unemployment benefit demand that we take action.
The figures are startling - out of 19,000 youth receiving the benefit, 34.8% are Maori - that's 6500 of our rangatahi; and 13.4% are Pasifika - another 2500.
We must do something to ensure they have a future to look forward to.
We need to be able to support those young people with the skills, the work experience and the confidence to invest in our future.
Paying it forward is all about helping us to regain our footing- and in particular to help Maori and Pasifika youth to find employment as the economy continues to recover.
Thing is - we need the putea in the national accounts to help make that happen - and I'm hoping part of that $2.48 billion Mr Dunne promised, can be set aside for just that.
The Maori Party is supporting this Bill in the interests of our young people, in the interests of our economy, and most of all in the interests of setting a strong pathway forward into our future.