Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill

This is the start of the Committee consideration of a very important bill. Clause 1, of course, is the title, and this bill has been called the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill. There is always a bit of a debate about whether a bill’s title accurately reflects what is in it. The title of this bill at least makes an attempt to describe what is in it—one has to comment reasonably positively on the fact that it does make an attempt—but is it accurate? I refer to the first part of the title, which concerns annual rates. It might have been more appropriate to state what this bill actually does—it confirms very high annual rates.

If we look at the most recent publication of The Economist, we will see that although New Zealand may not rank in the top half of the OECD in terms of growth rates, it sure as hell does in terms of tax rates on working families. In fact, New Zealand ranks sixth in the OECD. This bill is confirming those tax rates, so it would be slightly more accurate to call this bill the “Taxation (High Annual Tax Rates) Bill”, or the “Taxation (Sixth in the OECD Annual Tax Rates) Bill”, because that is what the latest data from the OECD shows. The latest data from the OECD shows that the direct tax burden on a working family in New Zealand is the sixth highest in the developed world. I am surprised that a Labour Government would want to confirm, under this legislation, those kinds of tax rates on working families. Labour claims to support working families. We are getting used to this Labour Government claiming all sorts of things. There is lots of rhetoric and lots of political spin but no action, and everyone is starting to realise that now. People listen to Prime Minister Helen Clark with one ear, because they know that what is going on behind the scenes is something totally different. That is why it might be more appropriate for the title of this bill to refer to the high annual tax rates that are being confirmed.

The next bit of the title is: “Maori Organisations”. What that does not tell us is that a large number of members of this House consider that that the part of the bill, covered by that part of the title, is introducing a racist piece of tax legislation. Therefore, it might be more appropriate to call the bill the “Taxation (High Annual Rates, Racist Rates) Bill”, because under the “Maori Organisations” bit of the title, special tax rates are being conferred on the basis of race.

💬 Clayton Cosgrove: Rubbish!

Dr the Hon LOCKWOOD SMITH: I invite Clayton Cosgrove to take a call and name one person in New Zealand, other than a Māori person, who can gain any benefit from the special tax rate being imposed under the bit in the title called “Maori Organisations”. If he can name one person in the whole of New Zealand, other than a Māori person, I will stand and apologise. I give the member that guarantee. If he takes a call and can identify one person, other than a Māori person, who, under the “Maori Organisations” part of this legislation, is going to get a favourable tax rate, I will stand and apologise to him directly in this Parliament. That is what the bill does, and that is why the title is too bland—it refers to taxation and to Māori organisations. In fact, a racist tax rate is being imposed here, and the title should reflect that.

💬 Hon George Hawkins: I raise a point of order, Mr Chairperson. The member keeps referring to racist legislation. That is out of order.

The CHAIRPERSON (H V Ross Robertson): No.

Dr the Hon LOCKWOOD SMITH: It was not only my view. In fact, distinguished consultants such as Chen Palmer and Partners came to the Finance and Expenditure Committee. The Rt Hon Geoffrey Palmer is a former Prime Minister and a former leader of the Labour Party. His consultancy considers that that measure is a racist measure. His consultancy came to the select committee and said that it considered that measure to be inappropriate. In fact, they submitted to the select committee—and I can refer members to the day they did it—that what is going on in this legislation is probably contrary to the New Zealand Bill of Rights Act.

The CHAIRPERSON (H V Ross Robertson): Before I call the next speaker, I suggest to members that they should be careful with some of the language they use, because it can lead to disorder.

I take pleasure in talking to the title on behalf of New Zealand First. As I was looking at the title “Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill”, I did think of some different names that could come along with the bill. Some other names could be used in relation to Part 2, which talks precisely about what Lockwood Smith has been talking about—that is, different tax rates for Māori organisations. I thought that we could call this bill the “Taxation (Annual Rates, Unequal Opportunities for”—

Dr the Hon Lockwood Smith: That’s a more polite version.

Yes, that is probably a more politically correct version.

Dr the Hon Lockwood Smith: It’s discriminatory.

Yes, that is a good point. I have put forward a Supplementary Order Paper on this bill, and we will be voting on it during the debate on Part 2. Basically, New Zealand First would agree with the bill if all New Zealanders had that opportunity, not just one type or one race. We believe that other groups should have that available to them, as well.

The CHAIRPERSON (H V Ross Robertson): I just say to the member that the debate on clause 1 is not an opportunity to debate the purpose or the principles of the bill. There will be an opportunity to do that during the debate on Part 1. I know that the member is a new member. If the Committee wants to widen the debate on clause 1, then that is a course that the Committee could take, but it has not done so as yet.

Thank you for your guidance, Mr Chairperson. I was getting right back to my point. If we adopt my Supplementary Order Paper, maybe we could give the bill a different title. We could call it the “Taxation (Annual Rates, Equal Opportunities, Taxpayer Compliance and Miscellaneous Provisions) Bill” or the “Taxation (Annual Rates, New Zealanders First, Taxpayer Compliance and Miscellaneous Provisions) Bill. We could call the bill the “One Nation (Organisations and Annual Rates) Bill”—or we could use the term “One New Zealand”. We could think of a whole raft of different names for this bill. I am sure the honourable Dr Lockwood Smith would agree with me, and I think that other members around the Chamber will see my point and see where I am coming from. They can see where we are going with this whole deal. If members support a Supplementary Order Paper like the one I will be promoting, New Zealand First would be happy to support it, and we would be able to change the title of the bill.

The debate on the title is actually quite a serious debate. I want to pick up on the comments my colleague Dr the Hon Lockwood Smith made about the importance of the title being a fair reflection of the content of the bill. Certainly, when members of the public and members of this House are drawn to a bill, the title that gives an indication of the bill’s substance and import. I put it to the Committee that, as Dr Lockwood Smith said, the title of this bill does not provide a fair reflection of what is included in the legislation, and I would like to give three examples of that.

The bill has the quite innocent-sounding phrase “Maori Organisations” in its title. This bill has nothing to do with the setting up of Māori organisations. It has nothing to do with the management of Māori organisations. What it does have a lot to do with is the provision of preferential tax treatment on the basis of the colour of one’s skin, and that fact is not reflected in the title. This bill has nothing to do with setting up or establishing Māori organisations, and everything to do with providing a tax break based solely on the colour of someone’s skin. It is bad that that could be allowed to happen. Similarly, the words “Taxpayer Compliance”, which are also in parentheses, do not give a fair reflection of what is proposed in the bill. It is added taxpayer compliance that is proposed in this bill. We know that the compliance review team work, led by Mr Al Dunn of McDonald’s Restaurants of New Zealand, was explicit in its view that quite radical changes were needed to the relationship between the taxpayer and the State when it came to the issue of compliance. This bill does nothing to reduce taxpayer compliance in the system. Just saying “taxpayer compliance” does not reflect the fact, as Dr the Hon Lockwood Smith pointed out, that there is an added burden on New Zealand taxpayers in this legislation.

The third point I want to pick up on is that it is wrong to say that this is an annual rates bill. We know that under this Labour Government tax rates have gone up. This Government has rapaciously collected more tax from hard-working New Zealand families than any other Government in the history of New Zealand. I say that the best way to fix child poverty, fix housing, fix education, and fix health is to leave that money in the pockets of the people who earn it. That is common sense, and I cannot understand why United Future members are going to vote for validating higher tax rates. United Future is going to vote for preferential—[Interruption] Well, it is in the title. It is not right to say “Maori Organisations” in the title. The bill gives a preferential tax break, based on the colour of one’s skin. That is in the bill, and it has to be clearly reflected in the title. If it was reflected in the title, I bet that the United Future members would not be voting for it. I bet they would not be voting for a bill entitled the “Taxation (Separate Tax Rates on the Basis of Your Skin) Bill”. I do not believe that they would. I have been on a platform where United Future MPs have spoken against race-based policies in bills. If the title were correctly amended, I cannot believe that the Government’s “coalition partner”, United Future, would be supporting this sort of a bill. Frankly, United Future members have to understand what is in this bill—higher tax rates from the most rapacious tax gatherers in the history of New Zealand, the “Labour-Alliance United Christians Government”. The words “Race-based Tax Rates” should be in the title because that is what is in this bill, and “Added Taxpayer Compliance” should also be in the title because that is what is included in the 154 pages we are debating today. The National Party says: “Change the bill.”

Perhaps a little history lesson for that member might be in order. The first point I want to make is that there have been separate tax rules for Māori authorities since 1939. I wonder how many National Governments have been around since then. Far too many for my liking, I should say.

💬 Darren Hughes: Four.

Only four. [Interruption] That is a good point Mr Chairman. I want to address the issues of the title, because the member was saying that the bill should be called other things. I think it is important to note that there have been separate tax rules for Māori authorities since 1939. The second point is that the review of this entire area, which has led to clause 1, “Title”, was started by the previous National Government in 1997—by the Hon Bill Birch. The third point is that during all this time, Māori authorities have been double-taxed. No one ever said that that was a racist issue. They were double-taxed, and that situation needed to be fixed. But the important thing the Finance and Expenditure Committee has done, which justifies the title of the bill, is tighten the definition of “Māori authority”, which ensures that the new rules are limited to a specific group of organisations that meet the Government’s strict policy criteria for being a Māori authority. Very, very good work has been done. I think it is important to know that where we are today was started by the previous National Government.

First of all, I compliment the Minister on taking a call, and I hope that he keeps up this good practice. We have many, many more questions that we will put to him, and I encourage him to continue to take calls. It is absolutely refreshing that a Labour Minister has taken a call during the Committee stage—except that he did not make much sense to me, or to the public, but that is beside the point. We encourage him to continue to take calls.

The Minister tried to tell us that if something has happened for the last 50 or 100 years, then it is good enough to continue. That is sad, because one of the reasons the title refers to tax rates for Māori organisations is that most taxpayers of Māori ethnic origin are on low incomes. If the Minister is saying that whatever happened in the last 50 years is good enough, I think it is very sad to aim so low. As well, I would like to take up that point, because my very learned colleague the Hon Lockwood Smith, a member of the Finance and Expenditure Committee, is adamant that there has not always been double taxation on Māori organisations, unless those organisations did not distribute their profits after 4 years. It is not true for the Minister to say that that was double taxation, because if it were, I would want the Minister to take another call to say whether this Government would refund that double taxation. He has to be a bit careful when he makes those assertions.

In relation to the title, I agree with my colleague the Hon Lockwood Smith that new legislation should have a meaningful title to convey to the public its purpose. So I think that the Labour Government should accept an amendment to the title, for a start, of the “Taxation (Top Half OECD High Tax Rate) Bill”. After all, the Labour Government should be happy. It has returned New Zealand to the top half of the OECD—unfortunately not through income levels, but through high tax rates. The next time the Hon Dr Michael Cullen stands up in the House he should not apologise for abandoning the target of returning New Zealand to the top half of the OECD; he should claim credit and say that, in effect, Labour has returned New Zealand to the top half of the OECD, but only through high tax rates. To be fair to members of the public and to convey to them what this bill is trying to achieve, it should be renamed the “Taxation (Preferential Treatment for Maori Organisations) Bill”. Now, I am getting a little bit concerned about why Mr Chairman keeps staring at me. I hope this speech is very narrow and focused—

The CHAIRPERSON (H V Ross Robertson): The debate is to the title.

Yes, absolutely! The title should be changed to “Taxation (Preferential Treatment for Maori Organisations) Bill”, which is a lot more appropriate. After all, if the Labour Government prefers to dish out that preferential treatment, then it should be courageous enough to include it specifically in the title so that the public will immediately know that the content of the legislation relates to the treatment of Māori organisations.

I have an interesting question for the Minister. Today we learnt that the Race Relations Commissioner advised private businesses to take on Māori names for their organisations. Would those businesses qualify for this preferential tax treatment because they have taken on a Māori name for their organisations? It is a matter of being fair to all New Zealanders, because I understand that some submitters challenged the definition of a Māori organisation when they made their submissions at the select committee.

It would also be useful, when the title simply states “Taxpayer Compliance”, for it to be more specific about what compliance that is.

The title of any bill, not the least this one before the Committee at this time, has to be instructive. It has to show at first glance exactly what the bill is about. Surely the title has to be informative about its true purpose. I suspect that it should also be reflective of the content of the bill. It should be totally accurate in all the above, and, indeed, should be self-explanatory. But, when one of the people in Otago picks up the Otago Daily Times, sees, as happens every day, that there are proceedings in the House—and the paper will indicate that this bill is being read in the House—and reads the title, I wonder whether he or she will probably just turn the page very, very rapidly, because it is a totally boring title and is not reflective of what this bill actually does. If, for example, the title contained the phrase “ 19.5 percent taxation for Māori”, I think that the good people of Otago, and everybody else in this country, would say: “Whoa, hang on here! Come back a step. What is this 19.5 percent for Māori?”. Then they would ring David Parker, the local constituent MP, and demand to know what this title is truly about. But they will turn the page, because the title is not instructive in any way, shape, or form about the true content of this bill.

When people see that the bill mentions taxation of Māori organisations, they will say that that is good, fair, and reasonable, because every organisation in this country should be taxed at the same rate as every other organisation. There is no problem with that, whatsoever. But this title does not contain the most vital piece of information that anybody would be looking for when trying to understand what the title is all about. The term “19.5 percent” is missing. I would suggest that when the people of the South Island look at this bill they are going to ask, given that most Māori live in the North Island, why the Government is giving special treatment to North Islanders yet again. South Island people will say: “The Government already takes 4c tax away from us in our fuel tax and shovels it up to Auckland to assist it with its transport problems.” All of a sudden, they see yet another example of the South Island missing out because the Government has decided to give a special group in our society a cheap rate of tax at 19.5 percent. But the tax rate, I must hastily add, is one that the ACT party totally agrees with. A flat tax rate of 19.5 percent for everybody would be fantastic and see this country really start to move, but this title has not given us an explanation about why a tax rate of 19.5 percent cannot apply to everybody.

The title also talks about “miscellaneous provisions”. What is a miscellaneous provision, at first glance? The public, I think, are actually very interested in the proceedings of Parliament. They affect peoples’ lives indirectly and, of course, directly. So people need to know what the “miscellaneous provisions” in the bill are. Yet, when the bill is reported in newspapers throughout this country, people will be none the wiser. Is a miscellaneous provision something that Mr Gordon Copeland agrees with? He wants to see tax cuts for people with health insurance, for example. Is that provision part of this bill? Is it reflected in the title? I cannot see it anywhere. These things are hugely important.

I rise to support the title of the bill. I think that the title Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill is accurate, and does reflect what this bill is all about.

I want to address, in rebuttal, a couple of the issues in relation to what other speakers have said, directly related to the title. I think that what our Minister said is quite apt. National members forget that in the 1990s the tax rate was 25 percent, and non-Māori organisation tax rates and company tax rates were at 33 percent. Forgive me—I am not a mathematician—but I would have thought that there was a gap there. There is a difference in those particular rates. As the Minister said, those special tax arrangements have been around since 1939. Dr Lockwood Smith, Mr Tony Ryall, and a number of others on that side of the House were members of a Government that did nothing to change that situation, and that did not object to it.

As the title reflects, this is an equitable and sound measure. Why? Because Māori authorities, as mentioned in the title, have a different scheme of arrangement from, say, commercial entities. Māori authorities are communally owned. They have huge constraints on their business activities. Members and beneficiaries of Māori authorities cannot dispose of their assets, as the title of this bill reflects, in the same way as beneficiaries of private sector entities.

I am amazed that some members got up and gave redneck, racist speeches—which are for the constituency they are trying to appeal to—instead of identifying the accuracy of the title of the bill. Instead of honing in on the title, they offered nothing—and they did nothing when they were in Government. I want to reflect on what submitters said about the title and legislation, and get it on record, because the Institute of Chartered Accountants of New Zealand said that only a limited group of people will qualify for the 19.5 percent tax rate, and that Māori authorities face unique issues. Again, that is reflected in the part of the title that refers to Māori organisations. KPMG Peat Marwick replied that their clients, that is, Māori organisations, do have the same—

The CHAIRPERSON (H V Ross Robertson): I say to the member that his comments are becoming completely irrelevant to the title. Would he please bring his points for debate back to speaking to the title? This is a very narrow debate. The purpose and other parts of the bill will be dealt with in Part 1. The member will return to the title, please.

I want members to reflect, through this debate on the title, that the title accurately reflects the provisions and the intent of this bill. I finish by saying that even Business New Zealand, a bastion of belief in National Party policies, said that it would be concerned if this bill were subject to abuse, but also said it feels that there are equity issues that need to be addressed. Indeed, in this title and bill, and since 1939, these equity issues are addressed. I commend that.

Maybe the banter could stop, so that I can make some important points about the title of this bill. I reiterate, as Dr the Hon Lockwood Smith, the Hon Tony Ryall, and Pansy Wong—who has been on the Commerce Committee, is an accountant, and has a very good understanding of these issues—have pointed out, this bill does cover a number of underlying issues. One might say that that is OK, as this title is one of the few that actually state quite a lot. It is quite a long title, but it does not cover the underlying issues in the bill. The title refers to taxation, annual rates, Māori organisations, taxpayer compliance, and miscellaneous provisions. But that is really just a cover-up, because it does not spell out what is in the bill. That is the important point that I will articulate this afternoon.

One of the important issues here—and this has been mentioned before, but it is important that members are fully aware of it—is that the bill gives a preferential tax rate of 19.5c in the dollar to a special group, which is Māori. So the title of this bill should be the “Special Māori Taxation Bill”, or the “Special Provisions for Māori Taxation Bill”. A number of interpretations can be made of the current title. When I buy a book, I want to know what is in it. I do not just want to know what the title is; I want to know what the book is actually about. As previous speakers have said, this title is a cover-up for what is really in the bill. This bill gives preferential treatment to one sector of the community. [Interruption] That member had a chance to speak, but he strayed off the topic. I am referring to the title. We have a provision here whereby a tax rate of 19.5c in the dollar will become the norm.

When the Minister spoke earlier, he said we have had double taxation. I remind the Minister—and I invite him to take a call—that the taxation provision applies only when profits have been retained, and have not been distributed at the 4-year peg. That is where double taxation has come in. As my honourable friend has said, that is why the title of this bill needs to be changed.

The other point is that this legislation confers taxation rates on an annual basis. It provides that we will have the highest taxation in the OECD group of countries. This is the only Government that has increased taxation.

Dr the Hon Lockwood Smith: The Czech Republic.

My friend mentions the Czech Republic. This bill is about taxation. We are the only country in the OECD group of countries that has increased taxation.

💬 Hon Tony Ryall: Unbelievable.

It is unbelievable. It is absolutely draconian. This Government has no idea about what makes the world go round, and no idea about business. It has increased the tax rate to 39 percent for those on incomes of $60,000. That is why the title of the bill must be changed: it has to reflect the increases in taxation.

As I said, the title is just a cover-up. It does not indicate what is in this bill. What about the corporate tax rate of 33 percent? What does this bill provide? It provides that a Māori authority will have a 19.5 percent tax rate. Does it indicate to my friend Pansy Wong, from the Asian community, that if she is in business she will receive a preferential tax rate of 19.5 percent? It does not do that. I am in business. Does the bill indicate that I can have a preferential tax rate of 19.5 percent? That is why the title of this bill is so important. In order to reflect the essence of this bill, the title should be the “Special Māori Taxation Bill”.

I move, That the question be now put.

This is quite a complex commencement clause. The Minister could assist the Committee a bit in its consideration of some areas of this clause, by explaining why there are so many different commencement dates. Let us start with clause 2(1), which states: “This Act comes into force on the date on which it receives the Royal assent, except as provided in this section.” That is rather different from usual, because bills normally come into effect on the day after the date on which they receive the royal assent. Maybe the Minister can explain why this particular bill does not come into effect the day after the date on which it receives the royal assent. I am not sure why that would be.

I will now go on to clause 2(1B). Interestingly, that contains a reference to the special provision the Government has put in for the superyachts that I guess came to New Zealand for the America’s Cup. They would have come to New Zealand at about the middle of last year, so I suppose it makes sense that the commencement date for that provision is 28 May last year. It is a retrospective provision, which confers a benefit on those superyachts and luxury pleasure craft. I guess that is a priority for this Labour Government. We have serious child poverty in New Zealand, but this Labour Government wants to enact retrospective legislation that excuses from taxation the superyachts and pleasure craft that came here for the America’s Cup. I guess that is why that provision has a retrospective commencement date. That is a demonstration of Labour’s priorities: New Zealand has children living in poverty, but the Government is giving tax away in respect of the superyachts. That would appear to be why that provision has a commencement date of 28 May 2002.

If we then go on to clause 2(2), we see that clause 45 is to come into force not last year, but on 15 January 2004. It does not come into effect until almost a whole year from now. One has to explore what clause 45 is all about. Clause 45 does confer benefit. It establishes the new PAYE intermediaries system, and that will be helpful to some taxpayers. One fully accepts that, but one has to ask the Minister in the chair about its commencement date, and it would be helpful if he could answer the question. It would be helpful if the Minister tried to address these commencement dates seriously and actually listened to us, instead of talking to the Chair. I am trying to find out why 15 January 2004 is the commencement date for the new PAYE intermediaries. It would seem to me that the start of a financial year would make more sense than that. One could accept that maybe that provision should not come into effect immediately, because a whole new system has to be set up. But why is the commencement date for that 15 January 2004? That is not the start of a tax year, so it would seem to me that that would add compliance costs. Maybe the Minister could explain the reason for that date. Maybe it has been chosen because 15 January may be the start of the work year. If that is the argument in favour of that date maybe it will add complexity, because it does not have anything to do with any tax year. But maybe that is the reason for it.

I am interested in the clauses that commence on 1 April 2003, because that is just 3 weeks away. We go into an adjournment next week, and that does not leave this Parliament much time to pass this bill. If those clauses are to come into effect on 1 April 2003, there is not a lot of time to get this legislation through Parliament. Interestingly, those clauses that are to come into effect on 1 April 2003 will enable the Government to take all the tax where a taxpayer has a dispute with the Inland Revenue Department. At the moment a taxpayer can hang on to 50 percent of the tax where there is a dispute, but clauses 101 to 103, which come into effect on 1 April this year, will enable the Inland Revenue Department to take all the tax that is in dispute. Of course, the amount of interest paid on it is way below commercial rates. It is interesting that the Government is being pretty tough on taxpayers by having that provision start on 1 April 2003, although I do accept that that is the start of the new financial year. It means that this Government will have to get off its butt and get this legislation through Parliament, because 1 April 2003 is not far away.

Then there are a number of other clauses that come into force on 1 July 2003. Again, it would be helpful if the Minister could advise us why that date has been chosen. I do accept that for some businesses 30 June is the end of the financial year. But we could do with an explanation as to why the Minister has chosen 15 January for the commencement of some provisions, and also 1 April—which is the start of the normal financial year—and 1 July for other provisions.

We are now speaking to clause 2, “Commencement”. I just observe that on Saturday I will be going to the opening of the new Catholic secondary school in Tauranga. I think the people there will be very disappointed to hear that Mr Copeland and the united Christians have voted for this bill. When I tell them that the commencement date will provide for the first racially based tax concession in New Zealand’s history, I do not think that that will go down very well with the many hundreds of people who will be there to hear me inform them that that is what the united Christians stand for. Why is that Minister proposing to compound the error of that special provision by allowing it to come into force before other provisions in the bill that will benefit the community as a whole? Why is he compounding his error by allowing that provision—clause 65—to come into force before the provisions that benefit the whole of the country? That is a very important point.

The National Party is saying up and down this country that it does not think that there should be tax concessions based on race. The one standard of citizenship that the Hon Bill English, our leader—the next Prime Minister—has talked about should be reflected in taxation. It is clear that New Zealanders are yearning for a Government that will put the ethos of the “spa pool liberals” in Cabinet to one side. National will not pursue race-based policies. I want to hear the Government justify why a trust whose beneficiaries are Pākehā cannot distribute funds to those beneficiaries at a tax rate of 19.5c in the dollar. Why do my kids have to pay 33c in the dollar in their tax payments as children, and yet my neighbours’ kids, if they are Māori, can have their trust distribution taxed at 19.5c in the dollar? They can go to the same school and travel on the same bus as my kids, but because their parents, or they, are beneficiaries of one Māori trust or another they will be treated differently, and that is wrong.

I am opposed to any commencement date that will allow that to happen. So I have moved an amendment to delay the introduction of this bill until 1 July 2006, when the next National-led Government will repeal those provisions. We will repeal those provisions. I tell the Government that everywhere I go, Bill English is getting a big tick for raising the issues that I am raising in this debate. The Government knows that, because its focus groups tell it what our focus groups tell us. This is an issue for which the time has come, and Bill English is the leader who has the credibility and the presence to be able to advance that argument, more than any other leader in this House. That is what New Zealanders say.

Why do my kids have to pay a higher taxation rate if they receive a distribution from a trust than some kids down the road who just happen to be Māori? Why should that happen? [Interruption] I say to Mr Duynhoven that that is not right. Why should Mr Duynhoven’s children have to pay 33c in the dollar, but someone else’s children pay 19.5c in the dollar? It is just not fair. There is the argument that for all the beneficiaries of Māori trusts, their effective tax rate is 19.5 percent. How patronising it is to Māori to say that they are all on the lowest tax rate, so that is what we will make the tax rate. That is atrocious; that is patronising. What about saying to people that they will be treated the same as others? That is how they would get ahead—not with this sort of patronising nonsense.

I can only continue Tony Ryall’s sound arguments put to this House regarding the commencement dates, and the particular issue he raises, that not only is there a more favourable treatment for Māori in terms of the tax rates—whereby we have 19.5 percent for Tony Ryall’s neighbours’ children, if they are Māori—

💬 Darren Hughes: What clause is it?

Clause 68. In fact, if Labour members had read the bill they would find that clause 68 changes the tax rate so that not only will Māori children receive a more favourable tax rate than Tony Ryall’s children, who live just next door, but that that favourable tax rate will come into force on a commencement date earlier than for Tony Ryall’s children. In other words, it is not just more favourable treatment, it is more timely treatment. I focus on that because we are talking about the commencement dates.

I was interested to see that those provisions—we are talking about clause 2, but clause 68 talks about that tax rate—come into force on the day that this bill receives the royal assent. Whereas other conditions, such as clause 45—a considerable number of Labour members have not read the bill, but if they turn to clause 45 they will see a graph in the bill that Ministers have approved. Did members notice that there is a graph in the bill, that Ministers have approved—as opposed to graphs that Ministers do not approve—that explains the payroll and employee information from employer to the pay intermediary to the employee. Of course, the Inland Revenue Department is kept in the loop.

Legislation addressing issues like that will not come into effect until 15 January 2004. Yet that is an essential part of the bill, of the running of this country, and particularly of businesses. Why will those provisions not come into effect when this legislation receives royal assent? That is the question that I put forward. Tony Ryall has put that question forward, as will other members on this side.

I notice a whole lot of new provisions in the Supplementary Order Paper. The commencement dates of those provisions are put back much further than the provision of the favourable treatment in terms of tax for Māori. That has been expanded from the original bill; where there were 9 clauses to come into force on 1 April 2003, there are now 16 clauses that were to come into force at the same time that Māori receive more favourable treatment under New Zealand’s tax law that have been put back.

I just put it to the House that members can argue all they like that Māori should receive more favourable tax treatment, but will they also argue that they should have more timely legislation, that they should receive that treatment in a more timely manner? The level playing field is fast disintegrating, and that is indicated in this bill. Clauses 133 to 136, 137—part 2 of that—138, and 142: 1 July 2003. They are put back even more—another few months, apart from that which addresses the more favourable tax treatment of Māori. If members investigate those parts of the bill, clause 133, for example, which, for members who have not read it, addresses interpretation—that concerns me.

I will answer very quickly the questions asked by Dr the Hon Lockwood Smith, and keep them in the same order as in the bill. First, as he rightly said, the superyacht one was the date of the announcement by the Government. Second, the accreditation period to register as PAYE intermediaries is to apply from the pay periods after 1 April 2004, which is the tax date. Third, fixing up the area of previous legislation: that is the date to which the previous legislation applies. Fourth, as he rightly points out, that is the beginning of the tax year; fifth, the issues related to GST and telecommunications: those were the agreed dates with the industry.

I want to speak just briefly to the commencement clause. I heard Tony Ryall say in his speech that he was putting up an amendment to it. New Zealand First wants to get in behind that amendment and support it, but probably not for quite the same reasons Tony Ryall gave. Tony Ryall obviously lives in a little bit of a fantasy land in thinking that Bill English will be the Prime Minister in 3 years’ time. Bill English just does not have enough charisma; he is just not going to get there. However, I come back to the commencement clause. Tony Ryall asked members opposite a very good question about one of the issues he was talking about. I do not think many members here caught the question, because he was not trying to be too loud, but I caught it. He asked why other ethnic groups do not get the benefit of this 19.5 percent tax rate, and Mahara Okeroa said: “Because you’re Māoris.” Darren Hughes knows, because he heard it. People on that side of the Chamber heard it. Mahara Okeroa said that the reason other ethnic groups do not get a 19.5 percent tax rate is that they are Māori. I thought that was pretty honest, but I guess he answered that question very well.

Sitting beside me is Edwin Perry, who is one of New Zealand First’s Māori members. He is the chairman of a trust involving about 4,000 acres and 80 beneficiaries. Those people are behind what New Zealand First is saying here. They say that they want this measure, and that is fine, but they want it to apply to all New Zealanders. They do not want special or preferential treatment. That is the message Edwin Perry has been getting, and he is the chairman of a Māori trust. One has to ask oneself a question when a member from the Labour Party, Mahara Okeroa, says bluntly that the reason is that they are Māori—

The CHAIRPERSON (Ann Hartley): I ask the member to come back to the commencement date.

Thank you for your guidance, Madam Chair. I have given New Zealand First’s reason for supporting Tony Ryall’s amendment. It is definitely not for the reasons he gave in relation to Bill English taking off his shirt and trying to become the Prime Minister in a few years’ time. We will support his amendment and oppose the commencement date.

Many would ask whether the commencement date of a bill is important and worth the bother of debating. I think it is. Commencement dates are very important, for a very obvious reason. If we ask people what the significant dates are in their lives, they will often say—[Interruption] If that member over there would stop squawking, she might actually learn something. If we ask people what the important dates in their lives are, one that they will say is important is Christmas Day, 25 December. Everybody reels that off. Others say that Anzac Day is a hugely important date. They also say that Waitangi Day is important, although in increasingly fewer numbers. Nevertheless, 6 February is an important day. Those are the dates when the commencement of a special celebration took place. So commencement dates are very important. I suspect that the commencement dates in this bill will also rank alongside, some would say, infamy, because they are the dates we will introduce in legislation that give a special tax rate to Māori. That is why the commencement of this process is so terribly important.

At this time, in this Parliament, a select committee is sitting on a question of fairness, amongst other things, in the scampi inquiry—essentially it is on a question of fairness. I ask the Committee this question: is the commencement date in this legislation fair? The answer—and I always get a good answer when I ask myself a sensible question like this—is “Absolutely not.” It is not fair to commence legislation that gives one section of our society a special dispensation. It would be marvellous if the commencement date for a 19.5 percent tax rate were next week, or on the particular date that this legislation will be enacted. That would be something that would be welcomed by any sensible, thinking person in this country. Every member on this side of the Chamber, I suspect including members of the United Future party, would say that the commencement of a fair and reasonable tax rate for everybody in this country is appropriate.

If we are to have this factionalism, this sectionalism, then I would stand and say that I think it is appropriate we should have a commencement date for special tax rates for high-country farmers. Now that would be a hugely popular measure amongst 350 of us, but I suspect that the rest of our community would say that a commencement date for special treatment for a small grouping of people like that would be inappropriate—and I guess that in a quiet moment I would have to agree with that—because I do not agree, and I am sure the majority of people in this Chamber would not agree, that we should at any time or any stage of our deliberations on this bill look at commencing legislation that is going to give separate, special treatment.

What is the word for that separate development? It used to be a South African word. I am sure it will spring to mind shortly. I think we all know what that word is. But that is the problem that will occur if we have a commencement of special treatment for a special group. Māori are a special group—I give them that. There is no question about that, just as I say that high-country farmers are a special group, just as people who live in Tauranga, for example, might be a special group. But we cannot isolate them and we cannot say that those people deserve special treatment and should have an enactment that gives them an advantage over the rest of our society. So that is why the commencement of this legislation should be held over, and I support Mr Tony Ryall’s contention that when the next election occurs—and I am sure it will be a centre-right Government by then—we can revisit this question of a 19.5 percent tax rate for everybody.

I move, That the question be now put.

The commencement date of legislation is very important, but when I look at the commencement dates that are mentioned here on page 6 of the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill, I note that a number of dates are retrospective. On Supplementary Order Paper 60, which has been lodged in the name of the Hon Dr Michael Cullen, I note there, under the commencement date, sections 5B and 65(14B)—

Dr the Hon Lockwood Smith: That’s retrospective.

Yes, they are treated as coming into force on 28 May 2002. That is retrospective. That is last year. So here we have commencement dates that are retrospective. Now, this party does not stand for retrospective legislation.

💬 David Benson-Pope: What do you stand for?

We are standing for lower taxes. That is what we stand for, and we are not going to support retrospective legislation that comes into effect on 25 May 2002. Further down Supplementary Order Paper, clause 2(4) states that sections 58B, and 165 to 171, are treated as coming into force on 17 October 2002. Once again, we have retrospective legislation. Here we have commencement dates that have already happened, as far as this bill goes, because they are retrospective.

My colleague the Hon Dr Lockwood Smith talked about section 100, which members will find in clause 2(5). That clause in particular states that those sections come in on 1 April of this year, and I just draw the House’s attention to that section 100 in the Supplementary Order Paper. Members will notice that it is the same in the bill, but it is reflected here in the Supplementary Order Paper. What does clause 100 say? This is significant in terms of a commencement date. It is very significant, because clause 100 is the obligation to pay tax where competent objection has been lodged. It states here: “the Commissioner may require a taxpayer to pay all tax in dispute if the Commissioner considers that there is a significant risk that the tax in dispute will not be paid should the taxpayer not succeed in objection proceedings.”

This is a very important part of the bill, and we will be discussing clause 100 in detail when we get into Part 3 of the bill. But this now includes a provision that on 1 April, which is not far away, this will come into effect. We are opposed to that in particular, because it takes away the rights of those people who may be in dispute with the Inland Revenue Department and having some issues they have to address. We feel that natural justice should prevail and we will not support that sort of clause being included.

We will not support the commencement date where we have legislation that gives favourable treatment to any one sector. We know what this bill is about. It is about a 19.5 percent tax rate for a certain sector of the community. That is what it states. It is very interesting that the people over there want to object, but if they actually read the bill they would know what it says. We will not support any commencement date that gives favourable treatment to one sector.

As I said in the debate on the title, the bill is misnamed. It should be the “Special Māori Taxation Bill”; so any commencement date that confers special privileges on any sector will not be supported by National. We will not support tax breaks on a racial basis, so any commencement date that confers that will not be accepted here. We will not support a commencement date where we have much higher compliance costs. That is the name of this bill. When we go back to the name of the bill, it talks about it being a taxpayer compliance and miscellaneous provisions bill, so even in the title we will see huge compliance costs, and we will not be supporting this commencement.

I move, That the question be now put.