Income Tax Bill: Third Reading

Tena koe Mr Speaker.

For most tangata whenua across Aotearoa, this day will not be remembered for the day that the Income Tax Bill passed its third reading in the House.

But it may, however, have taken on some interest if they had been aware of the connection that can be made between this Income Tax Bill and the seventh Maori monarch, Kingi Tuheitia Paki.

Tuheitia is a direct descendant of King Tawhiao who lived from 1825 to 1894. Tawhiao, the second Māori King, was absolutely committed in his drive for Māori autonomy, and established a parliament, treasury, and a bank to house the Treasury. His cabinet included ministers of Pākehā affairs, lands, justice, laws and taxes.

Revenue was raised by voluntary donations, ferry charges in Waikato, tithing, taxes, fees and fines taken by the local runanga, and it was all paid into the King’s Treasury.

Indeed as the record goes, it was King Tawhiao who had the first bank note in New Zealand printed.

So significant was this early monetary foundation, that the Reserve Bank of New Zealand to this day, retains King Tawhiao’s profile in its formal coat of arms.

Having established the symbolic relationship that exists between Turangawaewae Marae in Ngaruawahia, and the debating chamber, it only remains to be seen what practical, contemporary relevance the Income Tax Bill have for tangata whenua today.

Has the pursuit for rangatiratanga first anticipated by King Tawhiao borne fruit in the way in which the current Act will apply to income derived in the 2008/2009 and later income years?

Did the drive for the Bank of Aotearoa anticipate that in 2007, only 10% of Māori would make it the top income quintiles, as compared to 25% of Pākehā?

Did the desire for financial autonomy of the Māori people ever expect that many of their people would be unable to retain a high proportion of income through the impact of GST, student loan and now Kiwisaver?

The Income Tax Bill is motivated by the objective of making the legislation clear while also minimizing changes to both the effects of the legislation, and the associated compliance requirements of the Act.

It all seems so uncomplicated; the genuine desire to rewrite the law to make it clear, plain and consistent.

These are laudable goals.

The problem is, however, not just in the remedial amendments and corrections to the Act.

The problem lies in the very nature of the taxation system which is for the benefit of some users, and not others.

Over the last few months we have seen New Zealanders placed in a precarious financial position due to the market failure of their investment in Bridgecorp, VTL or Nathans Finance.

We have also witnessed a Hamilton businessman from Rafia Trading Company able to clock up evaded GST and income tax payments of more than $1.1m with associated interest and penalties of about $2 million.

New Zealanders who have either been dealt a savage blow by the vagaries of an uncertain market, or have themselves dodged and deceived their taxation responsibilities.



But the criminal offence that we find most objectionable, is the deliberate cryptic and complex confusion that the state has instituted through the wilful elimination of some families from the tax credit system.

We have talked previously, about the way in which the Government has bracketed together three component parts of the existing taxation structure - minimum family tax credit (which used to be family tax credit); inwork tax credit; family tax credit (used to be family support) and to refer to them now as the singular working for families tax credit.

And if all that sounded scrambled to you, just imagine what it is like for so many families who don’t know the actual value of the component parts, are not able to calculate their entitlements and abatements and are therefore now unable to know how to ‘work the system’ - to maximize their income and to know when and how abatement makes it unprofitable.

The very real fear that we have is that too many families will find it too confusing to apply for their tax credits, and will simply miss out.

It reeks of the Emperor’s new Clothes - the obvious truth is that Working for Families, and the inwork payment discriminate against specific targeted parents, despite the proclamation of Government that they are a Government that cares.

A Government that says it cares for young trainee apprentices; even though the majority, 54%, of those enrolled in 2001 and 2002 had dropped out of the Modern Apprenticeship Programmes.

Mr Speaker, it has taken fifteen years to rewrite the Income Tax Bill into its current version of some 3041 pages.

It was a pleasure to note the recommendation of the Finance and Expenditure Committee that Part M should be redrafted to give effect to the purpose of clarifying ad simplifying the legislation. Given the complexity of the Working for Families Tax Credits, the Select Committee recommended that any review of Part M should be taken separately.

These are views that we certainly support. We endorse the intention of promoting accessibility of the rewritten version to be easily understood by non-specialists.



But we would remind the House that it is not simply a matter of renumbering or reformatting on the basis of the Rewrite Advisory Panel’s advice that the House is being asked to consider this afternoon.



What we are considering today is the influence of the neo-liberal policies which at the very least have not created the equitable distribution of wealth through wages and benefits. What this has resulted in is large disposable income increases for high income earners, in direct contrast to ongoing income decreases for low income earners.



At the very minimum we would expect that the worst off families in Aotearoa have an adequate income to invest and sustain their children’s future.



Mr Speaker, back in 1886, the prospectus of Te Maungatautari Whare-Utu, the Bank of Aotearoa, included the following statement, and I quote:



“whereas the Māori People so banking have been grievously wronged in their dealings with these Europeans, who have largely profited thereby: and whereas our hearts being greatly grieved at this robbery of our people: be it known therefore that we the Chiefs of the tribes aforementioned, in council assembled, have decided to start a Bank for the use of the Māori people”.



One hundred and twenty one years ago, the quest for self-determination resulted in the establishment of the Māori Bank.



In 2007, there is continuing and solid evidence to support the initiative of such an institution, but the ongoing responsibility and opportunity provided within the Treaty partnership should also be seen in income tax reform which is based on the equitable distribution of wealth.



The Māori Party suggests that at its very basic form the Income Tax rewrite project, could have provided the means to progressively transform the inwork payment into a form of family support that could be transferred and benefit all children on the same basis.



The ultimate outcome of the transformation project could have been to achieve a universal family benefit that truly acknowledged the unique role of parenting and care-giving; that treasured and valued the significance of children as the wealth of the nation.



Now that would be a day, that all New Zealanders would remember this third reading of the Income Tax Bill for.