Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill

I move, That the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill be now read a second time. This omnibus bill continues the Government’s work to bring greater clarity to the tax rules, in order to ensure that they remain fit for purpose, that they are easy for businesses and other taxpayers to understand and to comply with, that they support businesses and innovation, and that everyone pays their fair share of tax. With those principles in mind, the majority of the proposals in this bill have been shaped by earlier feedback from businesses and other taxpayers, to ensure that the proposed changes are practical, pragmatic, and consistent across the tax system.

The main features in this bill seek to clarify the tax treatment of employer-provided accommodation, accommodation allowances, and other payments provided by employers to employees to reimburse them for expenditure incurred. The bill provides practical rules to help determine where to draw the line between what is taxable and what is not. This has been an area of particular concern for employers and employees, particularly when payments are linked to business travel, secondments, and projects. To deal with these concerns, the bill proposes that accommodation and accommodation payments provided to employees who are required to work away from their normal workplace on secondment or capital projects will be exempt from income tax under defined circumstances. This includes an exemption for up to 5 years for people working on the Canterbury earthquake recovery projects. An exemption is also included for payments for meals on work-related travel for up to 3 months. There is a specific exemption proposed for distinctive work clothing, and an exemption for plain-clothes allowances when a person has been provided with a uniform as part of their employment but because of the nature of their current duties they are required to also wear plain clothes. Together, these measures should give businesses more clarity and certainty on how the employee allowances provisions should be applied.

The second group of proposals in this bill will help support business growth and innovation by clarifying certain rules and removing distortions in the way some current rules apply. The first of these deals with the uncertainty and distortions arising from the current “black hole” tax treatment of certain types of expenditure. Under the changes proposed in the bill, the deductibility of certain company running costs will be clarified, and expenditure on abandoned applications for patents, resource consents, and plant variety rights will be immediately deductible.

A suite of clarifications is also proposed to the GST rules to make them easier to understand and apply. These include clarifying the definitions of “dwelling” and “commercial dwelling” in the Goods and Services Tax Act 1985; an amendment to the apportionment rules so that non-profit bodies can claim all of their GST input deductions, apart from those on inputs that relate to the making of exempt supplies; and clarifying the GST treatment of immigration and other services. The acquisition date of land and agreements for the sale and purchase of property or services in foreign currencies have also been clarified to give greater certainty to taxpayers, as have the tax rules for charities that have been removed from the Charities Register. Other proposals in the bill, such as changes to tighten the thin capitalisation rules and the rules relating to the tax treatment of land-related lease payments, are intended to remove distortions and protect New Zealand’s tax base.

One aspect of the bill has attracted attention. As you are aware, Mr Assistant Speaker Robertson, an intergovernmental agreement is currently being negotiated between New Zealand and the United States in readiness for changes following the enactment of the United States Foreign Account Tax Compliance Act, which is due to take effect on 1 July of this year. This bill therefore contains provisions to allow our financial institutions to more easily comply with that intergovernmental agreement once it has been finalised, and any future similar agreements.

These are the main proposals in the bill. In addition, I wish to advise that I shall be—

💬 Dr David Clark: Has it been finalised, Minister?

Listen. I will come to that in a moment, if you listen carefully. In addition, I wish to advise that I shall introduce a Supplementary Order Paper at the Committee of the whole House stage, which will contain a small number of minor technical amendments to ensure that the tax rules operate as intended.

At this point I would like to acknowledge and thank the Finance and Expenditure Committee for its careful consideration of these wide-ranging tax changes in the bill, and for the recommendations it made to further enhance the legislation. It gives me great pleasure to commend this bill to the House.

The member who has just resumed his seat, Todd McClay, needs to table the agreement that will come into effect in July this year. It is an agreement that has been negotiated behind closed doors. That is proper in the negotiation process. The Government has been very slow to finalise the agreement. That is why we are being asked as a Parliament to ratify an intergovernmental agreement we have yet to see. I have reason to believe that the Minister of Revenue has seen the agreement and that the agreement has now passed a stage where it is in its final text and is ready for Cabinet to sign it off.

💬 Hon Todd McClay: Haven’t seen it.

The Minister claims he has not seen it. He may be the only person in Cabinet who is being kept in the dark, but I doubt it very much. I challenge the Minister to table that document before this legislation, the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill, is passed. Transparency is a very important principle, and, unfortunately, this Government has a bad track record on transparency. We know that with the Skycity deal, we know that with the conversations around extra payments to Chorus, we know that with the matter of Oravida, and there are plenty more. But here, where the agreement has been negotiated and is awaiting Cabinet approval, it is incumbent upon the Minister to table it in the House, so that we can have a look at the agreement and we can see whether the text has been well negotiated, because it is very unusual.

Officials noted this. Officials noted this when we interviewed them at the Finance and Expenditure Committee. They said that it was very unusual for a select committee to be passing enabling legislation before the negotiated document had been tabled.

💬 Hon Todd McClay: Ask me tomorrow.

This is very, very unusual behaviour. I think that member opposite said that it was going to be tabled tomorrow.

💬 Hon Todd McClay: I said you can ask me at the committee tomorrow.

He says I can ask him in the committee tomorrow. Well, that is promising. I wish the member would do it sooner. The member has never seen it before but, having been challenged, he is confident that tomorrow it may be available to be released. I think that indicates a certain defensiveness, and it is a great shame that the member could not come clean first off and table the document in the House, because this is not the way this process should be done. It should not be the case that the cart comes before the horse, that Parliament is asked not to scrutinise the negotiated legislation, and that Parliament is asked simply to swish it through and wait and see what happens. That is not why Parliament is here. Parliament is here to properly examine such agreements.

This agreement, the Foreign Account Tax Compliance Act, affects 20,000 New Zealanders who were born in the US who have, as we understand, no further relationship with the USA. It affects those New Zealanders who have lived and worked in the USA. More broadly, it will affect their families, whose bank account details will be released, along with those US citizens, back to the United States. These people are giving up on their privacy by virtue of this legislation that is passing through the House. That is one thing that we can be pretty confident of, having not yet even seen the text. But this Government does not seem to take seriously those matters of privacy and the matter of an international negotiation being properly ratified through this Parliament through the normal processes. Instead, we have a very unusual process through the House right now.

The Labour Party stands for reciprocity in tax agreements. We do want to crack down on tax avoidance and tax evasion. That Government, across the Chamber, has a very poor record in that regard. We know, for example, that Google declares less than 5 percent of its revenues out of New Zealand for tax purposes, and yet the Government does nothing about it. We know that Facebook pays less tax than many members in this House, despite having 2.2 million users in New Zealand, which it values, according to its initial public offering, much more highly and says that if it was a New Zealand - based company, based on its initial public offering of 2012, it would be paying roughly 100 times as much tax in New Zealand if it was a responsible tax-paying organisation based here.

These questions are of little concern to that Government across the Chamber. It seems much more interested in swathes of rhetoric around beneficiaries than in actually chasing the huge tax-avoidance problem that we have. The Government says that we will get into the multinational process—the base erosion and profit shifting process. You wait. Mr Goldsmith will pop up in a minute and defend the OECD process whilst the US unilaterally goes out and makes New Zealanders pay for banks to collect data on their own people and to send the data across to the USA. That is what this Government will get up and defend in a minute.

The reason that we might enter into such an agreement is that the US has unilaterally said that it will charge 30 percent extra on wholesale lending if New Zealand does not comply. We may end up in that space, but it is incumbent upon us in a negotiation to put our side of the case, which is reciprocity. It is actually about making sure that tax avoidance is tackled wherever it falls in the world, not just where it is in the US’s advantage to tackle tax avoidance but also where it is in New Zealand’s advantage to tackle it.

But this Government will not do that. In the select committee it blocked putting the principle of reciprocity in the legislation. Mr Goldsmith, I am sure, will tell you when he gets up that there was good reason for not wanting reciprocity written into the agreement. We have yet to hear a plausible explanation as to why the Government does not want us to go after tax avoiders in New Zealand in the way that it is asking us to go after US tax avoiders at our own cost. There must be a reason there. Perhaps it is just the embarrassment of the Government that it has left this negotiation too late and it has happened too slowly. The officials clearly have not had the guidance or the leadership that they should have had from this Government, because they are very competent officials. I know that from having dealt with them previously. The fault rests with the leadership of this Government and its failure to set down a set of expectations around reducing tax avoidance and tax evasion. Many New Zealanders will be feeling uncomfortable with this change and with the fact that we are here putting the cart before the horse, and not scrutinising properly the legislation that is being passed through this House.

This Government does have a record of being slap-happy in respect of agreements. I have already mentioned the Skycity Casino deal. We know about the Oravida one and about the Government’s support partners—we can think of a matter before the courts currently where there seems to have been a slap-happy arrangement in respect of the way in which financial issues are treated. This cuts to the core of these members opposite, who are concerned about the corporate interest and not concerned about putting people first.

We on this side of the House, the Labour members, have a view that New Zealand ought to have a fairer tax system. Everybody ought to pay their fair share, and that is so that we can have the schools, the hospitals, the roads, the safe society, and the courts that give us a good society—the New Zealand that we all know and love from previous generations, where there is high trust, where we have a social safety net, and so forth. But across the way members are content to see things slip, content to see things go in the interests of the big players, and content to buckle under pressure and have Parliament do some very unusual things—

💬 Paul Goldsmith: This is a very rambling speech—a rambling speech.

—Mr Goldsmith, some very unusual things—in passing legislation that is not properly scrutinised by Parliament.

I should also note that there is around $8 billion in outstanding debt that this Government is unable to chase. It was reluctant to write it off, probably because it came down to part of its Budget-balancing exercise. It is tinkering here in this legislation with some other things that are positive. We will, actually, in the end support this legislation because we know there are some positive measures in it, but we are deeply concerned about the process and the way it has been done. We would not want to see the banks put in a difficult position where they would have to pay 30 percent withholding tax because this Government had not got around to doing its homework and had not got around to sorting this matter out long ago.

We would also like to draw attention to the challenges around community housing entities. The Minister will have wide-ranging discretionary powers to approve or disapprove of charitable exemptions as a result of this legislation. This delegation to the Minister of the effective right to confer lower taxes on some but not all taxpayers is just simply bad law. It is, quite simply put, terrible law, where the Minister has such wide-ranging discretionary powers to say “You’ll pay a lower tax rate than this person over here.”

It has been a rushed process. That is why we have ended up with this sloppy law. The Government put these changes out for consultation around Christmas-time and expected people to get back in early February. It was a rushed process. It tried to bury this. It shows where we end up when we have bad processes: we end up with bad law. The useful stuff in this law is forcing us to support it, but overall we are very disappointed with the process, because the law could be so much better. The problems also could be ironed out around exemptions, which KPMG drew to the attention of the committee—the taxable nature of an employer-provided allowance or benefit such as accommodation. We heard countless examples of exemptions in that area. Again, it is sloppy law being made that will require tidying up later.

I rise to speak on the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. I think that previous speech by David Clark was by way of saying that Labour was going to support this bill, but it was a roundabout way of getting to that story. I do want to thank the members of the Finance and Expenditure Committee, who worked together. I pay tribute to the Hon Shane Jones, who was part of the select committee and has now gone off to other pastures, having concluded that the prospect or the possibility of being an economic development Minister in a party that does not believe in economic development was not one that he wanted to pursue any further. So we wish him well in his career. The rest of the committee carried on and we welcome the arrival of Mr Robertson to work on the committee. I was interested in the comments that the previous speaker made about Facebook. He did not repeat his threat to close down Facebook if it did not bow to the knee of the New Zealand taxpayer, and I think all the hundreds of thousands of Facebook users in this country will be grateful for that.

Drilling down into this bill, it is all about building a more competitive and productive economy, and that is one of National’s key priorities. When we come to taxation, the most important thing is that the Government can raise the revenue that it requires, not through hiking tax rates but by ensuring that the existing tax bases are efficient and are applied fairly. So this is a piece of maintenance legislation that is about ensuring that taxpayers can understand and comply with the rules. It is necessary for the rules to be cohesive and fair, and to apply consistently and be regularly maintained, given the cleverness of people who seek to get around the rules.

The first thing that a Government can do in tax policy is make sure that its spending is under control, so that we are not having to hike rates or dream up new sorts of taxes like capital gains taxes, as proposed on the other side of the House. This Budget that we passed and were debating last week has reduced pressure by keeping Government spending under control. We are now back to around 30 percent of GDP and are on track to get lower for core Government spending, and that means that we do not have to be quite so rapacious in our tax gathering as previous Governments have been.

Drilling down into the details of this bill, I will look first at the area of employee allowances. The select committee received 97 submissions from interested groups and individuals and we heard oral evidence from 30 submitters. To be fair, most of those oral submissions related to the foreign account information-sharing agreements and the Foreign Account Tax Compliance Act. That, unfortunately, is not something that is around maintenance of the tax system in New Zealand; it has been forced upon us by the very unusual tax system that the United States has, which taxes US persons rather than residents, and by the changes that were being brought about through their changes that were going to come into effect on 1 July 2014. We did hear from a number of US persons who have been living in New Zealand who were concerned about the possible ramifications.

I suppose the main point to make is that this bill does not change tax law in the United States and it does not change any obligations of US citizens living in New Zealand. The obligations are no different from what they were before, after the passing of this bill. What this bill does do is to allow New Zealand banks to pass information on to the US in relation to US persons, once they cross a certain threshold, and that threshold will be set by the intergovernmental agreement. So people underneath that threshold need not worry, and it is only people who are identified as US persons and who have had those tax obligations. We have heard a lot of concern about this, but this is ultimately about collecting taxes across international borders. More broadly speaking, the select committee did support global efforts to combat international tax evasion and accept that New Zealand’s global reputation would suffer if we were not seen to be playing our part. So, although this is a difficult piece of legislation for some people, overall we believe that this legislation is important for the New Zealand economy.

The only other thing I would quickly draw attention to is the review of employee allowances. We heard a lot of submissions and made several changes there, just to try to clarify the rules so that the tax treatment of employer-provided accommodation and accommodation allowances and reimbursements were made clear, and so that taxpayers will minimise compliance and administration costs in any of those areas. On that basis, I commend this bill to the House. Thank you.

I rise to take a call on the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. Labour will be supporting this bill. There are some good provisions in this legislation, but I do want to just deal with some of the submissions that were made to the Finance and Expenditure Committee in respect of the intergovernmental agreement on tax enforcement, which the United States Government is effectively enforcing on the New Zealand Government.

I want to deal with some of the concerns that have been raised by the submitters on the bill. Can I say at the outset that the Labour Party does not support tax avoidance. We think that there is too much tax avoidance around the world and in New Zealand. It is concentrated amongst the wealthiest. Some of that avoidance is legal through tax loopholes like the absence of a capital gains tax in New Zealand, which, of course, is the largest gaping hole in our tax affairs and means that middle-income groups pay higher rates of overall taxation on their income and spending than higher-income people do, because middle-income people spend most of their income. Their economic income is normally in the form of taxable income and is taxed under the Income Tax Act, their spending is captured by GST, and their savings are not as high as higher-income people, who also have the benefit of avoiding tax on irregular capital income payments, which we know are disproportionately received by the wealthiest in society. If there is a glaring omission in this bill, it is to curb that hole in our tax system, which should be curbed for both reasons of fairness and reasons of economic efficiency.

It is no coincidence the OECD, the IMF, the Reserve Bank, and Treasury, all in their own way, say that this tax bias that we have at the moment, which shields some forms of economic income from being taxed even though they are economic income relied upon by the recipients—all of those agencies say that curbing that hole is one of the best things that could be done for the strength of the New Zealand economy, so that, firstly, we would have people paying their fair share of tax so other people do not have to pay it for them, and, secondly, we would have a stronger economy because we would have investment going into the productive parts of our economy rather than disproportionately into speculation on land-based assets.

The Prime Minister’s plaintive cries that we already have a capital gains tax are, of course, nonsense. They are seen by the vast majority of the public to be nonsense. What is true is that there are some categories of transactions involving land that are tantamount to trading in land or trading in changes in the value of land occasioned by changes in planning status, for example, which cause those transactions to be treated as income. It is not a capital gains tax; it is a tax on income-related activities for people who are traders.

💬 David Bennett: Higher tax rate, too.

What is that?

💬 David Bennett: It’s actually a higher tax rate if it’s income and not capital gains, isn’t it?

Well, that is true. When it is called income, they pay tax as income rather than as a capital gain, but only a very small fraction of capital returns are taxed in that matter. Indeed, when they are, they are not being taxed on a capital account; they are being taxed on an income account. So that is one example, and it is probably the most egregious example of tax avoidance in New Zealand—that people can classify certain types of income in a way that our economic income—

💬 David Bennett: Why don’t you answer the question, David?

Actually, I did not hear the question, otherwise I would have an answer to it. The member can take a call and explain to New Zealand why it is fair that the richest people in New Zealand do not pay as high a rate of tax on their overall economic income as middle-class taxpayers who cannot take advantage of some of those tax loopholes.

In respect of international tax avoidance, there are people who hide income from their home jurisdiction by failing to disclose it. America has got an enormous budget deficit at the moment, unlike New Zealand. Unlike New Zealand, they did not have a progressive Government during the 2000s. It is notable that the big difference between the tax policy of America and that of New Zealand is that in the 2000s New Zealand had a progressive Labour Government. It ran enormous Budget surpluses and therefore did not have this huge debt overhanging it at the time of the global financial crisis and did not have to cut back spending in a way that caused the downward spiral in the tax take that we have seen occur in places like the United States and parts of Europe.

As a consequence, the New Zealand Government, on the back of those surpluses of low debt and low unemployment it has inherited, has not had the same need to curb Government expenditure in the same way as had happened overseas, and it has been able to get back to surplus in 6 years, which is a good thing. But in the United States, they are not in that happy position, because they had a Government that did exactly as the National Opposition said the Labour Government should have done: they had a Government that during those times of plenty still ran deficits and ran up Government debt. So it is now scrambling around trying to enforce every little last bit of tax that it can—except from the wealthy, actually, in the case of the United States as well. The United States Government is trying to crack down on some of this international tax avoidance, including from its own citizens who might live in a country like New Zealand but be due to pay tax in America.

This is where it gets quite complex, because the American system of taxation is different from virtually any other country in the world in that it taxes on the basis of citizenship rather than where people live and earn their money. In New Zealand, if you are a New Zealand resident, while you are here you pay tax. If you move overseas, even if you remain a citizen, and if you become a resident of some overseas country and that is where you are living and you are not back here frequently, then you actually do not have to pay tax in New Zealand.

Under the American system, you are taxed for ever if you are still a citizen. That causes problems for people who have also become New Zealand residents, left the United States, come to New Zealand, are living New Zealand lives, have not renounced their US citizenship—and even if they did, they would occur enormous tax penalties when they did—and are really in a cleft stick. They are worried that the Foreign Account Tax Compliance Act will effectively mean that the American Internal Revenue Service will come to them while they are living in New Zealand, and, even though they have paid New Zealand taxes in accordance with New Zealand law, the Americans can theoretically say that they want them to pay a second lot of tax in America. That, of course, is patently unfair, but that unfairness arises not from New Zealand’s tax laws; that arises from the American tax laws.

As has already been pointed out by Paul Goldsmith—and I agree with him on this point—this legislation that we are passing through another stage today does not change that reality, but it does put those citizens perhaps more at risk because that information will or may be shared with the Americans under this agreement. We were assured by the officials that it is not intended to be chasing those sorts of people, but I can understand their nervousness that that might be the case in some future time.

So why, then, is New Zealand forced into a position where we actually have to pass this legislation? Well, because, as other countries have found around the world, if we do not, effectively there will be additional taxes taken from New Zealanders who are meeting their obligations in respect of investment vehicles that have some investments in America. I do not think there would be many people in this House who think that we should be imposing those additional tax obligations on New Zealand investors, for example, in their KiwiSaver schemes that have investments in America. That would be unfair on them.

As a consequence, we do think it is necessary to sign these agreements. However, we did ask for a simple amendment to the legislation. We will have in Committee stage an amendment to this effect. There should be in the empowering legislation an obligation that these agreements are reciprocal. At the moment this legislation has got no principles setting out the limits to the discretion of the Inland Revenue Department to enter into these intergovernmental agreements. We think that the discretion of the revenue department should be limited so that the agreements have got to be reciprocal. It would be good if we could put some of these other protections in.

As well as that, we thought we should be using this point of leverage to try to exert some pressure on America in respect of companies like Google and Facebook, which are not paying their fair share of tax in New Zealand on their New Zealand - derived revenue. We thought this opportunity should be used to try to fix that wrong as well. The Government, in respect of both of those suggested amendments, said no.

Kia ora, Mr Assistant Speaker. Ngā mihi nui ki a koutou. Kia ora. I rise to oppose the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. I am opposing this bill because this is a fossil fuel subsidy bill—plain and simple. That is what this bill is about. It is an omnibus bill. There are some parts in it that we can support, like the clothing allowance—non-controversial changes such as that. But there are some other parts of it that we are concerned about, such as the Foreign Account Tax Compliance Act provisions, where the bill is deeply surprising. It is quite novel to be agreeing in legislation to an international treaty system that is yet to have its negotiations concluded. I share the Labour Party’s minority view on that. We will be opposing this bill, and we will be opposing this bill because of the $6 million in tax breaks for the oil industry.

This is one of the wealthiest industries in the world, and it is one of the last industries in the world that we should be subsidising with New Zealand taxpayer dollars and incentivising with tax breaks. What this bill does is extend the previous Labour Government’s non-resident offshore oil rig and seismic vessel tax exemptions.

Our vision in the Green Party is for a clean-energy economy—a clean-energy economy that delivers greater jobs, greater profits, greater taxes, greater prosperity. This is the recipe for a richer New Zealand. The recipe for New Zealand’s economy is not to entice the Anadarkos, the Petrobrases, the TAG Oils, and members of the oil industry from around the world down to our shores, risking our environment and risking the economy that depends on it. That is not a recipe for a richer New Zealand. It is not even a credible economic strategy. It is simply hoping that someone finds something down there and that they do not leave too much of a mess as they get it out. It is symptomatic of the entire economic strategy of the National Government, which is predicated simply on raw logs, milk powder, and hoping for oil.

What we saw in the Budget was that Bill English wants to focus on just the fiscal surplus. What we did see was a surplus of poverty. We saw that 290,000 Kiwi kids, or 30 percent, are growing up in poverty. There was a surplus of poverty and a surplus of inequality but also a deficit. It was a deficit of ideas, a deficit of innovation, looking towards the future. A progressive Government would look to the future to a richer New Zealand that builds on our strengths, which is our current clean-energy expertise, and would take it forward. So we are not supporting tax breaks for the fossil fuel industry—the $6 million that officials advised—because we listen to the scientists. We listen to the scientists on the Intergovernmental Panel on Climate Change, who have recently warned us in dire tones of the consequences of increased fossil fuel emissions going into the atmosphere. Scientists down in Antarctica have warned us of the potentially irreversible collapse of the West Antarctica ice sheet. If these facts are not going to persuade the Government to stop playing fast and loose with taxpayer dollars to promote a dirty industry that warms our planet and risks our livelihood and, literally, the lives of tens of hundreds of thousands of people around the world, you have to ask what will.

The Government should be listening to the International Energy Agency and to UN head Christiana Figueres, who urge Governments like New Zealand’s to leave two-thirds of the fossil fuels in the ground. Obviously, we are still an oil-dependent economy. We still need oil to get around for our industrial activity. What we need to be doing is transitioning to a clean economy urgently. What we know is that these oil reserves, which Minister Heatley was spending a lot of his time trying to uncover in New Zealand’s waters, were assets—or so-called assets—that we could not afford to burn. The scientists are saying that we cannot afford to burn two-thirds of them if we want a stable climate for our kids to grow up in. So these are toxic assets. It is a carbon bubble that the Green Party would avoid because we would focus on the clean-energy opportunities for New Zealand.

As well as the $6 million in subsidies contained in this bill, which is soon to become an Act, there is the $46 million in tax breaks going to the oil industry, which the World Wide Fund for Nature calculated last financial year—$46 million of taxpayers’ money going to the oil industry to promote more oil drilling and to promote more fossil fuels. There is the $25 million in free seismic survey information, which is a direct subsidy to this industry. You have got to question the motives of this Government when it is subsidising the oil industry. There are handouts for Tīwai Point and laws for Anadarko.

I would rather be focusing on the real New Zealanders who are struggling with the high cost of living, the high cost of housing, and the low wages compared with other developed countries. You know, we work some of the longest hours for some of the smallest wages, and pay one of the highest costs of living in the world. There are real people in real houses and real families who need support, but, sadly, this Government seems to be more focused on the Anadarkos, the Petrobrases, and the Tīwai Points. It is time to focus on real New Zealanders.

This Government will change the law under urgency. It will spend tens of millions of taxpayer dollars to promote oil drilling. What would the Green Party do? Well, the Green Party would promote a clean-energy economy. We would get us to 100 percent electricity faster than the other parties would get us to 90 percent. We would transition our oil industry. We are opposed to deep-sea oil drilling. Onshore oil drilling, which does not carry the same risk profile, we would transition away. It is a good thing because from what we know from the data there are four times more jobs in clean energy than in fossil fuel. We would build a clean-energy export economy. This is something that Investment New Zealand says could be a $150 billion export opportunity by the 2030s. Through the Green Investment Bank, which we have recently announced, we could empower Kiwi businesses to be exporting the technology, the expertise, and the intellectual property, selling the world what it needs and selling the world what it wants. At the moment, when you subsidise the oil industry and you send those economic incentives, we are looking to last century’s economy—an economy that the science now says cannot go on and on for ever. What we have seen globally is a tipping point. In 2001, according to Bloomberg, more net capital investment was invested in clean energy than in all the fossil fuels and all the nuclear plants for electricity. The world is looking in one direction, but, sadly, the National Government is looking in the other direction.

We need to embrace the clean-energy export economy. That is what New Zealanders want. It is more secure and more resilient, it is about energy freedom, and it is about new jobs, but it is also about a richer New Zealand. PricewaterhouseCoopers estimates that we have a $7 billion to $22 billion annual economic opportunity from clean energy. So we would promote it through Government leadership, through an updated energy strategy. We would promote new businesses through the Green Investment Bank. We would have a strong and effective carbon price signal. We would update and modernise our laws for a climate reality world. We would work with the wind energy sector, the wave energy sector, and the biofuels sector to support them with research and development.

This is the richer future for New Zealand. My vision is not a handful of mostly foreign people working on these oil rigs, risking our jobs, albeit with taxpayer subsidies and taxpayer-funded tax breaks to entice them down here. My vision for the future of New Zealand is thousands of Kiwis installing insulation under people’s roofs. As we know, that has a 4:1 benefit. My vision is installing insulation under people’s roofs and putting solar panels on the top. It is exporting clean-energy technology, which the world wants, needs, and is paying top dollar for. That is the recipe for a rich New Zealand, not subsidising the fossil fuel industry with more tax breaks. Kia ora.

I am very pleased to rise to speak on the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill, and not so much on the green economy, which we have heard about from Gareth Hughes, the last speaker—Captain Picard, I believe, if I looked correctly in the newspaper this morning, at the Star Trek convention.

I wanted to raise a couple of points, particularly from the Greens. I am sad that they are opposing this bill. Any tax bill is obviously designed to make the economy work more efficiently and to provide the Crown with an ability to pay for what it needs. The irony that we are seeing from the Greens is that they want to spend more and more money on, we are hearing now, a gold-plated insulation system, but they are not actually interested in a bill like this, which provides tax revenue. We also heard what I think is a massive contradiction around the opposition to subsidies. Those Green members see the desire to have oil rig exemptions for foreign seismic vessels and the like, which was introduced by a Labour Government and happily rolled over by the National Government, as a subsidy, but then they continue on to talk about subsidies for biofuel, subsidies for other clean, green, smart technologies—of course, they are never really specific about what they are—and also subsidies that are effectively in the nature of the Green Investment Bank that they talk about.

On the other side we heard from Labour members about the continuing disquiet around Facebook and Google. As my colleague Paul Goldsmith pointed out, they are not quite talking about the ban on those sites that they had initially suggested. We heard from another speaker from Labour a little earlier that the key to economic growth in New Zealand is to create more taxes, such as a capital gains tax. It does not make sense.

This bill does make sense. It is an omnibus bill, and it is addressing a number of issues in the economy—a number of issues that have been fed back to us by employees, and by employers, of course. It is addressing areas around employee allowances, first and foremost—those elements from travel to meals—and seeking clarification there. This is a party about removing red tape and providing clarity. The bill is also looking, as we have heard about, at the Foreign Account Tax Compliance Act in America. The thing I would add there, of course, is that if you are a citizen of a country or a member of a club, you play by those rules, be you a New Zealander, a Canadian, an Australian, or an American. That is really quite critical, so we are putting those mechanisms in place. We are also working around the whole thin capitalisation approach, where at the moment people are able to load debt against their investments. We have looked at that and said that that is not appropriate. This is a wide-ranging bill, as you would expect with an omnibus bill. I support it in its second reading, and look forward to the Committee of the whole House.

On behalf of New Zealand First I take a call on the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. It is a great pleasure to follow on from Mr Simon O’Connor talking about clubs—the capital club and the corporate club, but in the Government’s case it is the Cabinet club—and tax concessions. It would be very interesting to know what sort of tax deductibility there is for donations to the Cabinet club, but I am sure they are all tax deductible—

💬 Hon Dr Nick Smith: Don’t be jealous. Just because you can’t raise funds.

Indeed. I am sure they are very tax deductible and significant.

In terms of this particular bill, New Zealand First is supporting it because we are a party that stands for simplifying the taxation system, improving on it, and streamlining tax matters. We have always said in New Zealand First that there is a need for a total overhaul of the taxation system, to try to get more streamlining and to cut out a lot of the red tape that is in there. In this particular case, in terms of the employee allowances, we support the moves to improve the definition of “accommodation”, so that accommodation provided in conjunction with employment would not be subject to tax and that reimbursements are much clearer in terms of accommodation, and also to reduce administration costs revolving around employees being accommodated and taking part in work activities. It also refers to meal payments and light refreshments for a work-related activity or event. Again, that simplifies things and reduces the amount of red tape around meal payments.

This bill will also allow deductions for expenditure on failed or aborted applications for resource consents, patents, and plant variety rights. Again, it is sensible to do that. Some of these situations with patents are long-extended and very risky ventures. It is the same with resource consents. They should, rightly, have definitions for expenditure if they fail.

Also, in terms of charities, this bill provides for charities that cease to exist or are deregistered. For them it provides for the calculation of tax on accumulated assets from the day the entity is removed from the Charities Register. Again, in this situation there can quite often be a situation where what is termed a charity no longer operates but may have built up a sizable asset base, and, again, whether that should be determined in terms of its tax liabilities comes through in this particular bill, and rightfully so. We would not want people to miss out on paying their rightful tax simply because they move from a charity into another entity, but then try to get away on the basis that it was a charity in the first place.

This bill also provides for community housing entities providing affordable housing—that they would be eligible for tax exemption and donee organisation status. Again, if we are to support affordable housing and encourage community housing to be developed, there is great merit in providing certain levels of tax exemption there. There is no point in the Government supporting community housing—the taxpayers of New Zealand supporting provision for affordable housing—to then turn round and tax that housing, to add costs to it, when in actual fact we are all trying to deliver it at the lowest possible price.

The thin capitalisation rules in this bill will also ensure that foreign-owned companies investing in New Zealand will pay their fair share of tax. They cannot allow excessive gearing of their companies’ New Zealand investments to load their debt in New Zealand in order to limit their tax exposure here. Again, this is sensible. We do not want international interests to use this as a soft-touch country to come to, load up their debt, buy into organisations, buy into companies here in New Zealand, leverage it to the maximum, take maximum tax credits from it, and then depart the country at a later date, leaving a great tax loss to this country. That will not be permitted under this bill.

The other two parts confirm the tax rates for the year. They confirm the annual rates of income tax for the 2014-15 year. It is a very standard administrative area of tax. One concern that New Zealand First has always expressed, however, is about the 2010 tax cuts that the National Government brought in, whereby the very wealthiest top 10 percent of New Zealanders got sizable tax cuts. In the case of the Prime Minister it was something in the order of a $1,000-a-week tax reduction. In the case of the then chief executive of Telecom, it was $5,000 a week in tax cuts that that individual was given on top of his multimillion-dollar salary. That is an area where New Zealand First disagrees with what the Government has done. However, in this bill this is confirming the current year’s tax rates, and we have to support that, in order to ensure that there is continuity of a sound and stable tax system.

The last bit of this is the Foreign Account Tax Compliance Act that the United States is bringing in on 1 July 2014—very soon—which basically is a worldwide effort to combat international tax evasion. We have been advised and information has been provided that New Zealand is part of a global signatory to this, to ensure that there is tax compliance worldwide and that the New Zealand Inland Revenue Department will be able to hold records for US citizens who are resident here and domiciled here, or who are active in business here, and that they in turn can provide that information through to the Inland Revenue Service in the United States in situations where they are required to ensure that the appropriate taxes have been paid.

It is very much an administrative bill. For everyone, tax is something in your life. Tax and death are two of the things that you must have in your life. Two of the things you cannot get away from are tax and death. In that respect, New Zealand First will be supporting this bill.

It is good to see that last party, New Zealand First, supporting the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill.

💬 Andrew Williams: We’re such a sensible party.

Well, not really. When we come and have a look at the speech of David Parker, it is interesting that one thing he was talking about was the capital gains tax. I asked him a question about what the treatment of capital gains would be under his tax policy for those people who are now paying capital gains tax as investors in property. He dismissed the Prime Minister’s arguments that there already is a capital gains tax on those who buy and sell property, generally within that 10-year period. They would be seen as a trader, and therefore they would generally pay tax. Mr Parker was deliberately silent in this House and would not answer that question. I ask Labour members who will be speaking later on this bill to actually answer the questions so that the New Zealand public can know what will happen to those traders. Will they be paying tax under the capital gains tax rate? Or will they be paying tax as they do now, on a revenue-based amount? Because all capital gains taxes around the world generally are at a lower rate than an income tax rate.

If you look at the Australian rate, for example, they take off a value for the incremental increase in inflation. Under the Labour policy, those people trading in properties would actually potentially be paying less tax. They would be paying less tax than those people pay who are investing in properties and reselling, for the sake of that. That goes against what they are saying they want a capital gains tax for. I want someone from the Labour Party to actually answer their tax policy and tell us what rate people will be paying if, under a capital gains tax, they were buying or selling property. At the moment they will be paying more than under a Labour approach. Thank you.

In conjunction with my colleague Carol Beaumont, who was shifting seats at the time I was called, I want to record once again that we support the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill, because it does make some important clarifications in a number of tax areas, and that is good. The principles of tax law and tax administration are that the tax payable and the tax system should be as simple as possible, should be accessible as possible in terms of understanding it, and should be easy to administer, both for workers who are taxed and for their employers or the tax collectors who are administering their tax affairs in terms of collection, before imparting the tax collected to the Inland Revenue Department. So the objectives of the legislation are perfectly sensible and normal.

I want to focus my comments on the employment-related aspects of the bill, which cover the taxation—or non-taxation—of accommodation payments, meal allowances, and clothing allowances. We have had a good tradition in this country for many years of costs incurred by workers or by employers on behalf of workers, so that workers can execute their duties as an employee and carry out their work, normally winning some sort of tax deductibility, because they are costs incurred in going about earning an income by that worker, but nevertheless are costs that need to be incurred in order to do so. They are costs that should not be incurred by the worker, and indeed, from the employer’s point of view, they have a number of business expenses, but the expenses incurred—for example, in providing accommodation, providing a meal, or providing clothing—are costs that would otherwise be a burden to the business and may, in fact, be an impediment to the generation of that extra employment. So there are good policy reasons as to why there have been tax deductions.

I have to say that it is somewhat surprising that in this day and age this House finds itself in the position of passing legislation that is so prescriptive and so specific on these particular allowances, when I think that it has been commonly understood for a long time that expenses incurred in the carrying out of a worker’s duties are typically tax deductible. When we look at the provisions in this bill in relation to accommodation expenses, they make perfect sense where a worker has to travel away from their normal point of domicile to another place in order to carry out their duties. We would expect that in relation to the Christchurch rebuild, just as we have seen in so many other industries over so many years. The extractive industries, particularly oil and gas, are classic examples where people typically do travel long distances to do their work. They will do a 2 or 3-week hitch, they will finish their duties and tasks, and they will then go away for 2 or 3 weeks before they resume their work. Tax deductibility encourages or promotes mobility of the workforce and flexibility of deployment, particularly for those tasks and occupations that are specialist in nature and where the workforce is not easy to train up and where it not easy to create skilled labour in a jiffy. So these sorts of allowances perform a very important task when it comes to the workforce, and to mobility and flexibility.

When it comes to the meal allowance provisions, the bill provides that certain work-related meals will be tax deductible, will not be taxable, and will not be subject to fringe benefit tax. That is right and proper. That is the appropriate thing to do. Either paying a meal allowance or paying a reimbursement for a meal is not to be treated as income in the hands of the worker and therefore is payable tax-free. The legislation does not make it clear, but it is possible, of course, that a meal eaten by a National MP at a Cabinet club could, of course, come under this provision. It may well be that a meal that is eaten, enjoyed, or sucked up by a National MP at the Northern Club, the Wellesley Club, or the Wellington Club falls within their duties. Let us face it—if the recent media accounts are anything to go by, supping at the table of the Northern Club, the Wellesley Club, and the Wellington Club seems to be a regular undertaking by National MPs. That may also be tax deductible, or, at least, members will find that a payment that is a reimbursement of that meal by Parliamentary Service, or, more likely, the head honchos in the head office of the National Party, will be able to be made tax-free. I am sure there will be National MPs who will be breathing a sigh of relief, perhaps, that this now very prescriptive provision will ease the burden that they are under of having to go and have all these meals and no doubt talk about great matters of policy, immigration or otherwise.

I think the interesting thing about all this, however, is that, notwithstanding this provision for the tax-free nature of meal allowances and reimbursing payments for meals, it runs counter to the other policy drive that this Government is making in its industrial legislation—and the honourable member David Bennett knows all about this, because he is ramming it through at the moment—and that is the removal of scheduled meal breaks, which have been a standard provision in employment agreements from time immemorial. There is an inconsistency in that on the one hand we have legislation that is about eliminating meal breaks altogether, but on the other hand for those lucky enough to get a meal away from home, they can get it reimbursed tax-free.

The third aspect of the bill that I want to comment on is the payments for distinctive work clothing. Clause 23 covers off this particular area. It is a new section in the income tax legislation, new section CW 17CC. The sections in the income tax legislation are now taking on the appearance of a registration number plate for a vehicle, but, anyway, in new section CW 17CC there is a new provision providing for the tax-free provision of either allowances or clothing that is distinctive in nature. Presumably a high-visibility vest would be a distinctive item of clothing for those working in hazardous industries. It is just as well that the provision of a high-visibility vest would be tax-free and will not incur any tax burden, because, of course, the health and safety legislation that this Government is passing requires—in a mandatory provision—employers to provide such clothing. So there, at least, is some consistency. Compare that with the meal allowance provision, where this Government is busily abolishing meal breaks. At least in relation to the clothing provisions of this bill, there is some consistency.

The other thing that this bill does, of course—at least in the form that it has come back to the House in from the Finance and Expenditure Committee—is that the insidious attempt to remove the allowance that plain-clothes police officers have traditionally had the benefit of has now at least been removed from the bill. Police officers—at least those carrying out plain-clothes work—can breathe easy at night knowing that they will continue to be supported in their very difficult and stressful roles, and that they will not incur an extra burden just because they happen to get reimbursed or receive an extra allowance to provide for clothes outside the uniform that they would otherwise be provided. I make those interesting observations. It is good to have legislation that tidies these things up. Tax legislation should be simple. It should make our tax law accessible, sensible, and consistent. Ideally, it would be consistent with other Government policy—and in this case, there is at least one allowance that is not—but notwithstanding that, we will support the bill.

I wish to speak only very briefly in support of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. I want to touch on a couple of points. Firstly, I just want to make the observation that it is a shame to see that even in a relatively benign tax bill like this Andrew Williams sought to go down that muckraking path, talking about Cabinet clubs and the like. You would think that after the news media coverage on Television One and TV3 on Sunday night those members would have got the message that being nasty and muckraking is not going to help them, but in the race to 20 percent they can keep doing what they want if they want.

I just want to touch briefly on two parts of this bill. Firstly, in relation to the accommodation allowance rules for employees that are being changed in this particular bill, we did hear some submissions around boarding schools and the way in which they should treat student accommodation. I just want to put on the record the fact that the Finance and Expenditure Committee did consider those matters in quite a bit of detail. The question was around whether in a boarding school a matron’s flat of, say, 50 square metres, sitting underneath the boarding house, with lots of boys running around the boarding house in the middle of the night, is worth the same amount of money as a 50 square metre piece of property down the road. The answer is probably no, so the boarding schools had some issues around how they should value that piece of property within their boarding school. The committee did consider a range of options that the boarding schools wanted, including at one end of the spectrum a full exemption from having to pay tax on that accommodation. Ultimately, though, the committee came down to the point of view that the Inland Revenue Department could issue some very detailed and helpful operational guidance to those taxpayers. We think that that will be a method by which those boarding schools and any other taxpayers in a similar situation will have some good guidance to allow them to properly assess the value of their property.

The second point I also want to make briefly is around the Foreign Account Tax Compliance Act in the United States. It is legislation that is very complex and has led to a lot of concern from New Zealanders who also happen to be US residents for tax purposes. The committee did give a lot of consideration to this issue as well. Ultimately, though, that legislation is legislation in the United States. There is a requirement for those within New Zealand to comply with their tax obligations in the United States. If we were to do nothing as a country, the risk would be that institutions that have operations in the United States would be subject to a 30 percent withholding tax if there were not appropriate agreements put in place between New Zealand and the United States. So the committee came to the point of view that it was appropriate that we enable the financial institutions within New Zealand to have agreements in place that will enable them to transmit the data required by the United States. People will consent to that data being transferred by way of agreements with their own financial institution. The risk to New Zealand taxpayers in doing nothing is very high, and that is why the committee could not completely ignore the issue.

I commend this bill to the House. There are some good legislative changes in this bill that will be helpful for New Zealanders.

I raise a point of order, Mr Speaker. I did not want to interrupt the previous member, Jami-Lee Ross, in the full flow of his speech, but at the beginning he made reference to Andrew Williams. I wonder whether he might like to correct that, because I think that Mr Williams has spoken in support of the bill and was not muckraking. Mr Ross may well have got his Andrews mixed up.

That is actually a debating point; it is not something you raise as a point of order. If the member misheard or misunderstood, that is not an occasion for a point of order. The next call is a split call—Darien Fenton.

It is a pleasure to take a call in the second reading of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. In listening to the debate about this bill, one of the things that you hear about so often in this House is the difference of treatment, where one set of rules for one set of people is completely different to another. It usually is to do with how much power you have, either as a worker or as a taxpayer. The disappointing thing, in looking at this bill in the first instance, is that it not only changes a whole lot of rules that have been implemented under the former Minister of Revenue Peter Dunne, such as the tax on plain-clothes workers and the accommodation tax on earthquake rebuild workers, but it does nothing to address the issue of tax avoidance in this country.

Last year the Inland Revenue Department found that 107 out of 161 high-wealth individuals who own or control more than $50 million worth of assets declared that their personal income in the last financial year was less than $70,000. The starting point for the top tax bracket is 33c in the dollar. That is just disgraceful. These multimillionaires use a variety of 6,800 tax-planning devices, such as companies, trusts, and overseas bank accounts, to avoid paying tax. One had a network of 197 entities. Although this bill is important, and I do believe that the Finance and Expenditure Committee has done a good job on tidying it up, it is disappointing to see that once again we have a tax bill in this House that does nothing—nothing—to address the biggest gap we have in our tax system, which is tax avoidance from those who are already very well off and who do not need to be avoiding tax. In fact, they should be paying their fair share. That is what tax is about. It is about people paying their fair share. So we support this bill because we support a fair tax system and we support tidying up rules that have been messy and confusing for people—not only employers but also employees.

I do note the comment in the Labour minority report, though, about the rushed process. Once again, I am sorry to have to repeat myself, because I seem to say this quite a lot in the House, but this is a very complex bill, which has pages and pages of addenda to it. The process through the select committee was over the Christmas period, which made it very difficult to address the issues. I again congratulate the select committee members who worked hard to get that done, but I also congratulate the submitters who had to gather their thoughts and interrupt their Christmas and New Year to help the Government out, because somehow, somewhere along the way, the process was mucked up.

I wanted to also talk about some of the employee entitlements. Jami-Lee Ross said—well, he was referring to Andrew Little, I think, when he talked about muckraking. I mean, the member cannot help himself if he forgets. He has got such a stressful life. He does forget people’s names from time to time. It is not muckraking to talk about the differences in treatment of one piece of legislation and another. I cannot help but be struck by the fact that although this piece of legislation deals with tax breaks on mayoral entitlements, we have another piece of legislation in this House that actually plans to reduce the rights to meals and rest breaks of every other worker in the country.

Similarly, with the accommodation treatment, there is a range of situations that have been described. The select committee has extended that. It applies to mobile workers and others, but then there are farmers and migrant workers working on farms. I particularly want to mention the Recognised Seasonal Employer scheme. The Recognised Seasonal Employer scheme was started by Labour. We depended on those migrant workers to come here and work to pick our fruit. But it was this Government that actually reduced the accommodation allowance for those workers. It used to be the minimum wage plus the accommodation allowance; it is now the minimum wage including the accommodation allowance. What about them? Then there are the clothing allowances. I had a call from someone who talked about how he works in the snow for a car rental company, how he has to wash cars outside in the pouring rain, and how he gets no clothing allowance and no clothing entitlement. It is not fair. I would like to see some balance in future legislation.

I rise to take a short call on behalf of the Green Party on the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. I will speak about two things in this bill that we have grave concerns about, and they are the primary reasons why we will not be supporting this bill.

I have to start by correcting one of the previous speakers, National Party member Simon O’Connor, who said earlier that the Green Party was proposing a green bank that would involve subsidies to cleantech and greentech. I think that Mr O’Connor is unclear on our actual policy, because the Green Investment Bank—which the Green Party proposed, and, of course, similar sorts of banks are operating successfully in many other jurisdictions—would be entirely on commercial terms. It would be a for-profit bank, which would also help sustainable businesses to have access to capital by filling a niche in that area of lack. So I think that Mr O’Connor was mistaken.

Of course, that is the sort of smart green idea that we need, unlike what is happening in this bill, which is that the National Government is extending tax breaks for oil companies to come here and explore for oil. In 2014 that is the last thing that we should be giving companies tax breaks for, because the world simply cannot afford to burn all of the fossil fuel reserves that oil companies already have on their books. We have got more coal and more oil that have already been found than we can afford to burn and still have a stable climate. So it seems strange that the Government will be encouraging and facilitating more fossil fuel exploration in New Zealand when, in fact, it is exactly the right time to be incentivising smart green technology, which is going to enable our children and grandchildren to be prosperous for many decades to come.

The other concern we have with this bill, of course, is the provision around the Foreign Account Tax Compliance Act—that is, the foreign account information-sharing agreement. I am a US citizen myself—I am a dual citizen—and there are about 70,000 New Zealanders who have US citizenship and we are in a very strange situation where the United States is one of the only countries in the world to tax on the basis of citizenship rather than on the basis of residency. New Zealand citizens who live overseas do not have a requirement to file taxes here in New Zealand but Unites States citizens, even people who were born in the United States and never lived there their entire lives but happen to hold citizenship, may not be aware that they have this legal requirement. What the United States is doing is exercising its economic power and acting unilaterally to force other countries to comply with new laws that it has around disclosure of foreign bank accounts.

The Green Party is very much in favour of global moves to ensure transparency and the exchange of information for the purposes of tax. We want to see a crackdown on tax avoidance globally. That is a good thing. But, unfortunately, what is happening here is that the United States is acting on its own and it is going out and forcing other countries to comply with its laws. It is not really being a team player.

The OECD has this global forum, which we in New Zealand and 121 other countries have been party to, and that seems to us the appropriate way to go about information sharing, because all the countries are cooperating together rather than just the United States forcing New Zealand, and many other countries, to provide information on people living in New Zealand who legally own bank accounts.

It is interesting also, I note, that one of the members who spoke previously, Mr O’Connor, said something like “All tax legislation is reducing compliance costs and increasing efficiency.” In this particular case I am pretty sure it is going to be increasing compliance costs because our Inland Revenue Department is going to have to suddenly collect all this additional information on whether citizens or residents of New Zealand are citizens of the United States and all of the banks here in the New Zealand are going to have to do the same. If anything, I think this is going to increase some compliance costs.

We do have some concerns about privacy: the privacy of New Zealand residents and citizens who are living here, having their information shared with the United States Internal Revenue Service, and the fact that this is not really an agreement where we can be certain that New Zealand is getting anything in return for complying with the United States simply going around wielding its weight. But that seems pretty typical of this National Government. The US says “Jump.” and John Key says “How high?”.

I am happy to take a call on the second reading of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill and I commend the bill to the House.