Income Sharing
July 16 2:46 PM
AUTHOR:
Later this month, I hope to introduce legislation to Parliament to permit couples raising children up to the age of 18 years to share their incomes between them for tax purposes, meaning that many of them will end up paying lower tax bills.
This is UnitedFuture’s flagship policy, and I am delighted we are now in a position to get it before Parliament for consideration. Under our confidence and supply agreement with National, we secured agreement that the government would support the introduction and reference to a select committee of such legislation. While that is still a long way from ensuring it eventually passes into law, it is nevertheless an important start, and an opportunity for a widespread public debate about the best way of supporting families raising children. I am constantly amazed that at virtually every meeting I speak at, someone raises the issue of income sharing, and what a good thing it would be. So I have confidence that once it is introduced the income sharing legislation will create a groundswell of support that any government will find difficult to hold out against. My aim is that the income sharing legislation, if passed, will take effect from 1 April 2012.
Much of the legwork for income sharing was done during the last term of the previous Labour-led government. Under its 2005 confidence and supply agreement with UnitedFuture, Labour agreed to the issuing of a government discussion canvassing ideas on how income sharing might work. That paper was produced in 2008, and the responses to it have largely shaped the proposal that is my current Bill.
So, given its essentially contrarian current approach to political discourse (where everything that happened between 1999 and 2008 was unquestionably right, and everything that has happened since 2008 unerringly wrong – even if it began during Labour’s time) Labour’s recent decision to oppose the income sharing legislation comes as hardly any surprise. Labour says income sharing is too narrowly focused. It overlooks the latest census data showing that there are just under 425,000 two parent New Zealand families with children 18 years old or younger living at home. Of that number, 287,000 families – 68% – have either one income; or, a full-time income supplemented by a part-time income. These are the people who will benefit from income sharing, but they are obviously not part of Labour’s new mainstream.
I may be naïve, but I would have thought giving potentially two of out of every three families a few more tax choices, and trusting them to make the best decisions for themselves was something to be encouraged, not ridiculed. After all, we have always let business partners share their incomes between them to minimise their tax liabilities, so why not extend that to life partners, engaged in the most important business of all, raising their families?