Taxation (Transformation: First Phase Simplification and Other Measures) Bill

I am pleased to take a very, very short call to address the issues raised by the Rev. Dr David Clark in Part 2 of the bill, and specifically clauses 59 and 116—his challenge to me to verify—

The CHAIRPERSON (Hon Chester Borrows): Clauses 1 and 2.

Yes, we are working on the commencement clause, which is why I raise it in this context. The member will note that clauses 59 and 116, among others, have a commencement date of 1 April 2016. The date 1 April has passed. The system changes that will give effect to this have already been made; now we need to give legal effect to it. These are system changes being made to the legacy system, not to the new system. They have already been made, we are ready to go, and the only thing holding it up is the passage of the legislation. I encourage—nay, I implore—Messrs Clark and Robertson not to delay it any further and to get out of the Committee stage.

I thank the Minister for that explanation. We will see whether, in practice, this is true. I suspect the Inland Revenue Department (IRD) had given assurances around the child support legislation previously, which were amendments to the legacy system. Simply because they are amendments to the legacy system does not always make them straightforward—that is part of the problem with the legacy system. It is something that needs to be addressed and updated, because it is hard work to push changes through the system—at least, that is my understanding from talking to those technical experts at the IRD who make those changes. That is part of what needs to be rectified.

We need a 21st century responsive tax system, and this Government has, of course, delayed. It has been in Government for 8 years, and the whole time it has been here, it has had brought to its attention that the system is out of date. The Government has been very slow off the mark, and these changes along the way, which it has not been able to make, have hindered tax policy in New Zealand, and they have harmed the reputation of the IRD, which is no longer as strong as it once was. Its reputation as a place of fair dealing and of being easy to deal with has slipped under this Government, and I do not think that the Minister can duck that responsibility so easily. I do thank him for his assurance; he has, at least, sought some assurance that this will be possible to implement, but, of course, the proof will be in the pudding.

In clause 1, I do want to refer to the title of the bill. It is the first and second words of the title of the bill that I want to reference: taxation transformation. Well, I think we have heard in the course of the debate tonight that it is the view of the current Government that the transformation of our taxation system relies on the definition of verbs—that is, going to transform our taxation system. It relies upon electronic signatures being allowed to be used—that is, transformation for this Government. It is about the ability of young people to opt out of KiwiSaver—even though none of them have actually asked to—that, apparently, is transformative as well.

Transformation of our taxation system will occur when the Government gets off its chuff and starts actually making people pay their fair share. Fundamentally, tax is the price of a decent society, the price of a fair society, and the price of making sure that every single New Zealander gets the opportunities that they are entitled to by being here. It is about making sure that everyone gets a fair go—

💬 David Bennett: No, it’s not.

—and David Bennett does not care about New Zealanders getting a fair go. David Bennett is so out of touch that he does not think that transformation of the tax system in New Zealand actually requires people to pay their tax.

I will tell you what else would transform the tax system in New Zealand: when the Prime Minister gets up—he is talking about multinational tax avoidance—and says “Well, you see, the problem here is that the ethical thing to do might not be the legal thing to do.” How can those two things be different in a proper, functioning tax system: the ethical thing to do and the legal thing to do—they are not quite the same? If we were transforming the tax system—which is what this bill says in its title that it wants to do—then we would not have the Prime Minister standing up and saying that. We would have a Prime Minister who actually understands the difference between right and wrong and who actually understands that everybody paying their fair share is the core of our tax system.

With all due respect to colleagues who use phrases like “aggressive tax planning”, “aggressive tax planning” is people getting away with not paying their fair share. That is why members on this side of the Chamber have been so annoyed and upset with the blasé attitude of the Government to New Zealand’s increasing reputation as a tax haven. I know that the Minister and others will say “But we’re not a tax haven”—

The CHAIRPERSON (Hon Chester Borrows): Order! I just want to bring the member’s attention to the fact that a Supplementary Order Paper addressing the issue that the member is straying into has been found out of order. He was allowed the opportunity to make an aside. If he wants to continue to make this a bigger chunk of this speech, then I am afraid that he will have to sit down.

I am referring to the title of the bill, which claims to be transforming our tax system—

The CHAIRPERSON (Hon Chester Borrows): Well, make that argument then.

—and the transformation of the tax system we are looking for on this side of the Chamber is one where we can hold our heads high internationally. That would be a transformed tax system. A transformed tax system would collect the billions of dollars from multinationals that decide that they do not want to pay tax in New Zealand. Transformation would be about saying we stand for every New Zealander paying their fair share. Would it not be a great day when, rather than aggressive tax planning, we actually had companies and individuals in New Zealand who said: “I am paying my tax because it’s the right thing to do. I’m paying my fair share because it’s my contribution to society. It’s my way of saying I am part of society.” That would transform our tax system, not tinkering about the edges, not looking into whether or not different parts of the IT system work or not, but actually saying that our tax system is the fundamentals of a decent society, the fundamentals—

💬 Andrew Bayly: Why don’t you just say it—you want to put up tax rates?

—of what allows New Zealanders to do that.

Andrew Bayly is talking to us here about the right and wrong thing to do. Andrew Bayly and his Government need to make sure that they are on the side of ordinary New Zealanders—

💬 David Bennett: Oh, what a load of rubbish.

David Bennett reacts—the people who pay their PAYE every day of the week, those New Zealanders who do the right thing, who meet their tax obligations—and David Bennett would prefer to be on the side of the fortunate few who can hire an accountant and hide their tax. Well shame on you, Mr Bennett. Shame on you. If you want to transform the tax system, Mr Bennett, get alongside parties who want New Zealanders to do the right thing. [Bell rung] Mr Chair? There ain’t no one else.

I move, That the question be now put.

I want to pick up where my colleague Grant Robertson left off, because he raised the critical point: this bill is called a transformation bill. I had a look in a dictionary for what “transformation” means. It is a very simple term. It means to make a “Marked change in the form, nature, or appearance of:”—“Make a marked change in the form, nature, or appearance of:”. It is not about a little patch-up here and there, which this bill is about. We approve of the patch-ups, but what we would like to see is genuine transformation, where people are actually encouraged to pay their fair share, where tax avoidance is not something to be sniffed at and laughed at, and where Mr Bennett does not chuckle away at the very suggestion that everyone should pay their fair share.

We want genuine transformation, on this side of this House. We believe in having a fair society, where everybody has the opportunity to get ahead, not just the wealthiest people whom National is alongside. We want a New Zealand where middle New Zealand has the same kinds of opportunities that the wealthy few whom those members on that side are supporting have. That is the kind of transformation we want and it is not in this bill, and that is why I contend that this bill is not named in an accurate fashion. We might be better to say “Incremental Change:”—the “Taxation (Incremental Change: First Phase Simplification and Other Measures) Bill”.

What we see in this bill is not genuine transformation. It is not changing those tax structures that enable tax planning aggressively to avoid paying a fair share. It is not addressing the issue of the way in which our society is becoming increasingly divided, in which we have got these growing inequalities where we have the lowest homeownership rate—

💬 David Bennett: No, rubbish—rubbish.

—since 1951, Mr Bennett. It is not addressing those issues, this bill. It is an incremental bill, and so I contend it would be better named the “Taxation (Incremental Change: First Phase Simplification and Other Measures) Bill”. I look forward to the Minister’s consideration of this suggestion and to his thoughtful response.

I have got to confess that some of us are down here tonight for this debate on false pretences because we were told that National was going to introduce and pass through certain stages the Taxation (Transformation: First Phase Simplification and Other Measures) Bill. That is why we are here, only to find out that we have been grievously misled.

You will recall there was a family down in Louisiana in the United States called the Long family, and Huey Long’s famous comment about taxation was—very much epitomised by the National Party attitude when on the hustings, until it gets in here—that taxation reform is very much like “Don’t tax you, don’t tax me, tax that man behind the tree.” That is exactly where we are now tonight, because when we talk about transformation it is quite possible that people out there who do think that the Parliament in this country has got some sort of credibility and is actually serious about the word “transformation” in the title. There is nothing very transformative in this legislation at all. In fact, all it epitomises is that in the 8th year of its term in Government, National is still flitting around the edges and does not quite know what it is doing, and it will probably be back in 6 months to change this as well.

And then, on the issue of simplification, let me say that we have more tax law than the United States.

💬 Hon Member: No, we don’t.

We do so. It is more voluminous and more complicated than the United States, but, of course, over there if they catch someone cheating they put them behind bars for 10, 20, or more years. Here, we give them a knighthood or we cover it up. We do our utmost not to disclose it. Any transformation or simplification would certainly be attacking, for example, those trusts that are a big issue, politically, in this country, but which no one can mention tonight. With all that evidence glaringly out there in the public domain, with voluminous amounts yet to come soon to home in on all sorts of personalities in this country, and headlining the latest National Business Review on the front page, it does not make it into this legislation, which tells you that we may be wasting the taxpayers’ time and, indeed, the time of this Parliament.

Clause 1 agreed to.

The question was put that the amendment set out on Supplementary Order Paper 171 in the name of the Hon Michael Woodhouse to clause 2 be agreed to.

Amendment agreed to.

Clause 2 as amended agreed to.

Bill to be reported with amendment presently.