Taxation (Annual Rates, Venture Capital andMiscellaneous Provisions) Bill

This is important legislation before Parliament this evening.

💬 Simon Power: I raise a point of order, Madam Chairperson. I apologise for interrupting my colleague, but I seek a point of clarification for future reference. Is the Committee able to proceed with the debate if copies of the bill are not on the Table? My understanding, and I am open to correction, is that we are not able to proceed if copies of the bill are not on the Table.

The CHAIRPERSON (Ann Hartley): That is not correct. The bill is available in the Bills Office and, yes, the Committee can proceed.

Dr the Hon LOCKWOOD SMITH: As I was saying, this is important legislation. It contains 235 clauses, and this part we are debating right now contains amendments to the Goods and Services Tax Act, the Taxation Review Authorities Act, the Income Tax Act 1976, the Taxation Review Authorities Regulations, and the Partnership Act of 1908. That is fairly important legislation, and I suggest that this Labour Government is treating this Committee of the whole House with contempt, because there has been no attempt by the Government to explain either to the Committee or to people listening to this debate what on earth this is all about. The Government is showing contempt. Does it feel so little concern for the people of New Zealand that it thinks it can push legislation through. Members are meant to be examining the bill clause by clause, yet Government members do not even bother to get to their feet to tell the people of New Zealand what on earth the Government is trying to do?

What that invites us to do is to actually define what the Government is trying to do. I simply come back to something Government members do not want to talk about, and that is their colleague John Tamihere. I want to know, under Part 4, about the fake invoices at the Waipareira Trust that were overseen by John Tamihere. We all know that invoices are meant to be GST invoices, but these were fake invoices. What does this amendment to the Goods and Services Tax Act do to get John Tamihere off the hook in respect of those fake invoices, which may also have defrauded the taxpayers of New Zealand of GST?

If we look at other clauses in this bill—not in this part, so I will not spend too much time on them—there is a reference in the next part to an amount distributed to a member by a Māori authority. I think that if Government members do not treat the Committee with more respect and get to their feet to explain what all these amendments do, we will make our own interpretations and challenge this Government to prove that there is nothing in here to get John Tamihere off the GST commitment for the fake invoices. I challenge members opposite to get to their feet and explain how the GST was treated on the fake invoices for which their Cabinet colleague John Tamihere was responsible. When he gave a personal explanation in this Parliament they got to their feet and applauded him.

There is a question for these Labour members about the amendments in Part 4, because we have all sorts of amendments to do with GST—such as, zero rating of services, taxable period returns, and special returns. Is there something in clause 127, “Special returns”, that means it is a special provision to enable John Tamihere to file a tax return for the fake invoices? Is that what that provision is doing? I ask the Minister in the chair, the Hon David Cunliffe, to treat the public of New Zealand with respect and get to his feet and explain what these clauses are doing, because they are not just technical amendments. There are significant issues here, and why should the public not expect anything other than this?

After all, we know what this Labour Government did when its colleague Harry Duynhoven broke the law. It amended the law to get him off the hook. That is what it did to get him off the hook. We know what Helen Clark thinks of the law. When she was found to have forged a painting, she would not cooperate with the police so they could find out the truth of the matter. So why should the people of New Zealand not think that Part 4, where it talks about amending special returns for GST, is anything other than a provision to get John Tamihere off the hook in respect of his fake invoices?

I think my colleague Dr the Hon Lockwood Smith’s various questions deserve answers because he is right. The Government has not even bothered to take a call to explain to the public the various amendments to Part 4, particularly those to the goods and services tax. I will come back to the fake invoices later on.

Let me start off by saying that GST was introduced by a more progressive, liberal Labour Government in the 1980s. The Government that introduced that broad-based, indirect tax was a much cleverer Government. [Interruption] My colleague Richard Worth notes that that was in the 1980s. The David Lange Government understood that bringing down individual personal tax and bringing in a consumption tax was a much better, fairer tax system. It was not like this regressive minority Labour Government at the moment, which has increased personal tax. Today in question time my colleague John Key brought up the issue that this Government is daily raking in an additional $8 million of tax from direct-source deduction. We want the Minister in the chair, the Hon David Cunliffe, to take a call and explain to us whether Part 4, in any intentional or unintentional way, might distort that broad-based consumption tax, GST. After all, there are quite a few amendments—to the definition of goods and services in relation to financial services, to what a special return is, etc. While on this side of the Chamber the National Party is very supportive of GST, we feel that the Minister, to earn his salary, should at least attempt to take a call to explain what the consequences of those amendments are.

I would like to repeat some of the concerns raised by my colleague Dr the Hon Lockwood Smith about the implication of GST on fraudulent invoices. Would the Inland Revenue Department have got the input and output tax reconciliation when fraudulent invoices were issued? How do they get picked up? Do the trusts furnish a GST return? If that is the case, what is the implication if fraudulent invoices are GST inclusive? Would the Inland Revenue Department have started to demand that the proper tax be deducted? Would the trust actually be entitled to a refund? Did it furnish that tax in the correct taxable period? I really think the Minister, who receives a ministerial salary, should at least attempt to take a call to answer what the implication is of GST on fraudulent invoices. Does the fact that it is a fraudulent invoice mean that the input tax—in this case, it is probably an output tax—has been deducted and furnished to the Inland Revenue Department, and what implication does the amendment in this part have in those circumstances?

While National continues to support GST—a good indirect consumption tax, which is a much fairer tax—we want to know whether the amendments in Part 4 in any way have tainted the legislation.

In rising to speak to the Taxation (Annual Rates, Venture Capital and Miscellaneous Provisions) Bill I invite the Minister in the chair, the Hon David Cunliffe, to participate in the debate. The Minister’s failure to do so turns Parliament into a rubber stamp.

Some quite serious points have been raised, one of which goes to the integrity of the whole process we are dealing with. The Hon Lockwood Smith has asked a perfectly reasonable question with regard to this part, which talks about GST and refunds of tax. Of course, it carries on further from what we have already passed in Part 3 in relation to time limits on charging GST. He asked what the effect would be on the Waipareira Trust. I say to the Minister that the ACT party has received correspondence from accountants who have said that they have been reading with incredulity statements about the trust, about false invoices and the like, and they have asked: “How can this happen if the trust has been paying GST?”. If it has been paying GST, there ought to be a clear paper trail showing what has happened. Apparently, when one looks at the reports that are coming out, one finds that one thing that does not exist is a clear paper trail. That can only be if GST was not being paid.

The Minister was asked that by Lockwood Smith, and I now join him in asking that. While we are making changes to the law here, and to the position of taxpayers, are we, in fact, assisting the Waipareira Trust? Indeed, I asked the other day whether, when the Government drafted this legislation, it knew that it would be assisting a fellow Minister. Is that the purpose of this part? I say that the Minister has an obligation to get up and tell us what he knows about this provision. Does it assist Mr Tamihere—he is not the Hon Mr Tamihere now; I understand he is Mr Tamihere, but all members are honourable members—or the Waipareira Trust? These are reasonable questions to ask, and so far they have not been answered.

It appears to me that the answer is one of two explanations. The worst explanation is that it does and the Government does not want to tell us, but the more likely one is that the Minister does not know. I just say to him that that is not acceptable. He ought to know. He ought to be asking those questions, and he should not be presenting a bill to the House that could create an impression—which may not be deliberate—that this Government is prepared not just to bend the law to assist a colleague but to rewrite it.

Dr the Hon Lockwood Smith: It did it for Harry!

That is true; the Government did it for Mr Duynhoven. But at least in the case of Mr Duynhoven Government members were brazen about it. They came here and said: “We’re fixing it up for our mate.” They told us that. But here we have a situation where they may or may not be fixing it up for their mate.

I actually think the Minister does not know, but I also think he does not want to know. Well, I tell the Minister that that is not good enough. He ought to be able to get up and go through the provisions. We had the Minister of Finance in the House when we were debating the matter earlier, and he started to say that, no, it did not help them. When we drew to his attention what was actually in the bill—and I suspect that Mr Cullen is so busy that he either did not know or had forgotten what was in the bill—I could see on his face that he had started to realise that this bill most certainly will assist the Waipareira Trust, from the facts that we know, and from the facts that we suspect.

I suspect that the trust has not been paying GST. One of the great advantages of GST, and one of the reasons accountants like it, is that in order to fill out one’s GST return one has to have a decent set of accounts, which is better for a business. It also follows that if one does not have a decent set of accounts—and I have to say that the Waipareira Trust is not the only outfit I know that has not paid GST; I will be right up front and say I do not think the Pipi Foundation paid its GST, either—one would find it difficult to reconcile one’s GST. The difference between the Government and myself is that I think that is outrageous.

It is a privilege to rise on behalf of National and oppose the Taxation (Annual Rates, Venture Capital and Miscellaneous Provisions) Bill. It was truly said by Benjamin Franklin many years ago, in a letter that he wrote to Jean Baptiste Leroy-Beaulieu, that in this world nothing can be said to be certain except death and taxes. Part 4 is a complex and technical part of the bill, and I join with others in condemning the reluctance, or perhaps it is the refusal, of the Minister to stand and participate in this debate. I do that with a sense of sadness, because Mr Cunliffe came to the House quite recently as a new member with a great future—or so some people thought. Here he has an opportunity to show off his knowledge and his intellect, and to show that he is a capable and conscientious Minister with some knowledge of this bill. Does he take the opportunity to demonstrate his skill to the Committee? No. Are some of us questioning whether he has that skill? Yes. Is it probable that he lacks that skill? Yes. That is why I want to pick up on a number of technical issues in connection with Part 4—to prod the Minister from his seated position in the Chamber and his apparent lack of interest in this legislation, so he will rise and make some limited substantive comment on the issues I raise.

Part 4 contains a number of changes that amend various statutes. Other members have referred to changes to the Goods and Services Tax Act. There are amendments to the Taxation Review Authorities Act that I would like to deal with at some length in later calls. Also, there are amendments to the Income Tax Act 1976, particularly with regard to voting and market interests, amendments to the Taxation Review Authorities Regulations, and a very significant change to the Partnership Act of 1908—that old legislation.

I start the analysis by looking at the changes to the Taxation Review Authorities Act, which are set out in clause 141. That Act is not well-known legislation. Certainly, the role of the Taxation Review Authority is clear, and it has been discharged manfully by officials and members of the authority for a number of years. Why is it, I ask the Minister, that there has been a change in clause 141 that replaces the figure of $15,000 with the figure of $30,000? The question must be asked as to why there is no alignment between the position in a civil jurisdiction in respect of small claims and a different, and apparently seemingly illogical, alignment in connection with the Taxation Review Authority’s legislation. Surely the issues must be the same in both circumstances, and the monetary jurisdiction should not alter. Small claims are small claims, and across the broad brush of Government legislation there should be constancy. That is the first question I would like to raise.

The second aspect concerns the amendment to the Taxation Review Authorities Regulations. I am glad that the Minister is listening closely to this point, because I husband the hope that he may rise and make some contribution, other perhaps than belching, to the discussion that centres upon clause 144. For the first time, it seems, there is a definition in clause 144(1) of the meaning of the word “precedent”. I do not think it is a remarkable definition, but it states: “precedent means a decision of the authority that affects, or may affect the outcome of a separate and unrelated dispute between—”.

I am sorry to interrupt the member while he was on such a roll.

💬 Simon Power: Yield to him, then.

I am probably not sorry enough to do that.

💬 Opposition Members: We would rather listen to you.

I thank the Opposition members who say that they would rather listen to New Zealand First than to National members. At least it shows that New Zealand First is the voice of reason in the Chamber. That is where I will leave that matter. I would like to speak to clause 132, “Payment of tax”. I will not take the same approach as other speakers from the Opposition side of the Chamber; I will take a different approach. I want to ask a question of the Minister in the chair, the Hon David Cunliffe. When people pay their tax—whether it is 39c in the dollar, or 30c in the dollar, or whatever it is—

💬 Simon Power: Is this about GST?

Whether it is GST, income tax, or whatever it is—[Interruption] I am speaking about GST, but I am also speaking about taxes in general—

💬 Hon Richard Prebble: I raise a point of order, Mr Chairperson. Mr McNair is trying to make a speech. I am trying to listen to him, but his difficulty is that he is being interjected on by people who are sitting right behind him. It is breaking up his speech. It does not enable him to make a coherent speech, and therefore I cannot follow it. I really think the members who are sitting closest to Mr McNair should give him a fair go— he gave them a fair go—so that we can hear him properly.

The CHAIRPERSON (Hon Clem Simich): I thank the member for raising that point on the correct procedure in the Chamber. There should be no interjections from members sitting directly behind the member who is speaking.

Thank you, Mr Chairman, and I thank the member, as well. It is a lot easier to speak when one does not have people interjecting from behind. I am very well aware that Part 4 deals with amendments to the Goods and Services Tax Act, but I am trying to make the point that whatever that payment of tax—whether it is tax paid by a business, by an individual, or by whomever it is, and whether it is GST, income tax, or another form of tax—I wonder whether a portion of that tax could be put into people’s savings for the future. That is the point I would like the Minister to comment on, if he wishes. I want to know from the Minister’s end where the Government is at on that issue. Has it given thought to whether some tax could be channelled into individual accounts? I would like the Minister to tell us where the Government is at, and what its view is, on that.

One of the biggest tragedies we are coming up against is the lack of savings by younger couples, and by anybody else for that matter—the negative state whereby people do not have any savings. In fact, most New Zealanders are in huge, huge debt. My question to the Minister is about where the Government is at in terms of being able to channel some of—

💬 Lianne Dalziel: There was a referendum on that, but the people voted against it.

A former Minister interjects. That is right; a referendum on that was lost. But I still think it is fair to ask that question, because the Government does have a superannuation fund. It has gone one step in the right direction, we would say, but it is a long, long way off from where we would like to see it go. I would like the Minister to tell us where the Government is at in terms of channelling certain amounts of tax into the savings area. No matter where that money comes from—whether it is from GST or whether, as is more likely, it is from income tax—it should go towards people’s long-term savings for their future. I think that is a very reasonable question.

The Government says the country is experiencing an economic boom. I do not think it is, because if it was the Government would be taking tax payments and using them for something that would really benefit people, and especially young people. Superannuation payouts are not likely to be available to them, especially if they happen to retire under a National Party regime and have to look after themselves. I say that we need to make life more certain for our younger people and younger couples. Not only do they have huge amounts of debt but just about every New Zealander is in that situation, if we go by the statistics.

Progress reported.

Report adopted.

The House adjourned at 9.56 p.m.