Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2)

I present a legislative statement on the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2).

💬 SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.

I move, That the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2) be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by the committee by 2 March 2023.

The borders have opened up. Growth is up. Inflation has peaked and is heading down. Tourism is bouncing back. Even before that, GDP was back and higher than it was pre-COVID days and the economy is returning to normal. Unemployment is at 3.3 percent and we have had a fantastic health and economic outcome as we come out of the COVID pandemic. Mask mandates are gone, vaccination mandates are on the way out except in the health sector, and life is starting to return to normal. As it does, we need to ensure that our tax rules are appropriate and operating as intended. The Government wants to ensure that the tax system minimises compliance costs that it places on taxpayers. The tax system also needs to keep up to date with modern business practices and changes and new developments abroad. In addition, this bill aims to keep New Zealand’s tax rules in line with global developments led at the OECD.

There are many aspects to this bill that I can’t go into in detail, but I will provide members with a quick overview. The term “platform economy” in the name of the bill refers to the relatively new part of the economy which uses apps to hail a car to take you to your destination, to have food delivered to your door, or to find a short-term holiday home. The platforms serve as a facilitator between New Zealanders who are purchasers, and the people who are providing them with goods or services. It’s a fast-growing part of the economy and it’s got some great features and it’s encouraged many people to participate in economic life. For many who do, they’re not fully aware of the tax implications.

Of course, this isn’t unique to New Zealand, and the OECD has been working on the issue and considered a range of options that could be considered for implementation to ensure tax systems remain fit for purpose—fair to all participants, be it taxi drivers competing against Uber drivers or Uber drivers competing against taxi drivers. It will be at motels and hotels, in a traditional form, or Airbnb accommodation. This bill, therefore, contains proposals to implement an information reporting and exchange framework developed by the OECD on digital platforms.

As these platforms typically operate across borders and are based in other countries, this information measure will provide tax authorities with information about income earned by sellers on the platforms that’s crucial to the functioning of the tax system. It proposes that digital platforms will be required to collect and return GST on short-stay and visitor accommodation, ride sharing, and food and beverage delivery services. This supports New Zealand’s broad-based GST system and ensures that services delivered through these platforms have the same treatment for GST as services delivered through other business models, as I’ve discussed. It’s necessary to ensure that the GST system continues to function efficiently, minimises compliance costs for businesses, especially small businesses. So the bill also provides a legislative framework for determining how GST is applied to goods and services funded by charges, fees, and levies paid under the legislation.

The bill, as originally introduced, also included measures to regularise the claiming of GST inputs by providers of financial services. This was misrepresented by the Opposition as being a GST on contributions to KiwiSaver or KiwiSaver funds or withdrawals from KiwiSaver funds; it never was. It was also misrepresented as GST being introduced on fund managers’ fees. It was never that either. What it was was regularising the GST input credits that are claimed by some fund managers but not others. It didn’t land well and we thought that the risk of undermining KiwiSaver should not be taken, and so we hastily withdrew that provision of the bill. I would note that the tax changes to KiwiSaver in the last decade have come from the National Party, who removed the tax-free status of employer contributions and added tax, removed the $1,000 kick-start payment, and removed the annual subsidy for fees. We didn’t do anything on that; we started and believe in KiwiSaver. And so whilst we believed that rule change to be fair when we introduced it, we weren’t going to put at risk the KiwiSaver system. It wasn’t that big an issue.

In respect of apportionment rules for GST, when business assets are used for both business and private purposes, we wanted to clarify that the part of the usage devoted to business purposes can be claimed back but the rest shouldn’t. The private benefit shouldn’t result in a GST claim, so these apportionment rules limit the GST claimable to the business use of the assets. The current apportionment rules can be complex for businesses, particularly smaller ones, to comply with, and we’re improving that to make it less onerous and less complex to do the right thing as part of our general commitment to reducing complexity, the tax system where appropriate.

The bill also proposes to modernise and enable greater flexibility in the rules that apply to the tax treatment of cross-border workers, and clarifies how pay-as-you-earn withholding tax, fringe benefit tax, employer superannuation contribution tax, and non-resident contractors tax rules apply to such workers.

Continuing on the international theme. Some New Zealand companies are concerned that they may have inadvertently become a tax resident in Australia due to recent changes in the Australian interpretation of its corporate tax residence rules. The bill proposes amendments to provide more certainty to New Zealand companies by ensuring they retain access to loss, grouping, consolidation, and imputation credit account rules. It’s also important to resolve integrity issues identified with the application of domestic dividend exemption and corporate migration rules to dual resident companies. The proposed amendments to these bills aim to strike a balance between ensuring the integrity of the rules and limiting the risk of overreach.

Closer to home, the bill at last exempts public transport fares from the fringe benefit tax (FBT). These can be subsidised by an employer, mainly for the purpose of their employees travelling between their home and work. Currently, we’ve got an imbalance in the system where employers don’t have to charge FBT on car parks provided to employees, but do in respect of subsidies for transport fares. That’s obviously an undesirable inconsistency. The last Government under National tried to neutralise that by charging FBT on car parks, but they got a backlash a bit similar to the one that we got in respect of the fund management fees issue I just referred to, and retreated from that proposal. Since then, we’ve had this imbalance between car parks and public transport, and we think the way through in this climate-constrained world is not to charge FBT on public transport.

The bill also proposes to extend the exemption of the interest limitation rules on build-to-rent assets. Members will also recall that the original interest limitation measures enacted provided for an exemption for new builds for 20 years. The policy objective here of changes to interest limitation rules was to discourage investors leveraging a portfolio of assets to outbid a first-home buyer or someone who just wants a house to live in, which was the increasing trend that we’ve seen in New Zealand as the concentration of housing assets has continued over the years. That change is actually working well, and, since we did that, we have seen the number of first-home buyers in the market increase relative to people buying buildings to rent. We haven’t seen the rapid increase in rents that was forewarned by the National Party. That hasn’t happened and, indeed, rents are now increasing in Auckland at a lower rate than inflation because we’re getting ahead on supply because of our massive house-build programme. So we believe we’ve got this right and it’s never been our intention to disincentivise investor demand for new rentals—for new housing to be put into rentals. And, therefore, we’re proposing to extend the build-to-rent exemption in perpetuity.

Finally, the bill also contains that crucial requirement of the tax system and that it sets the annual tax rates for the 2022-23 year. Those rates have not changed from the prior tax year.

So that’s a quick overview of the bill. It gives me great pleasure to amend—commend this bill to the House.

Thank you, Mr Speaker. It’s a pleasure to be talking on the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Bill (No 2), because, as we’re all aware, this is the restart. This is the new generation. This is mark 2 of this piece of legislation. Much fanfare was introduced, not that long ago, by the Hon Mr Parker, and, of course, what a shocker that was. Less than 24 hours, Mr Parker, and that well-thought-out bill that was introduced was backtracked; absolutely removed from the House, and then reintroduced. Anyway—

💬 Matt Doocey: Caught with a hand in the cookie jar.

—yes, Mr Doocey—we will be opposing this bill on a number of counts.

The first one is it enshrines the current tax rates, and we are absolutely opposed to that. New Zealanders are in the middle of a cost of living crisis, driven by a high inflation rate. That means that people automatically go into a higher tax bracket and end up paying more tax—even you, Mr Speaker—and that means that every New Zealander is worse off and poorer. And that’s why we think that there should be an adjustment to our tax rates to make sure that hard-working New Zealanders keep the same amount of money on effective terms as they would if there hadn’t been such a high rate of inflation. That is why we do not agree with enshrining the current tax rates, and that is why National has come up with a plan to make sure there’s an adjustment for what is termed “fiscal drag” which, effectively, means that people are paying more tax as a result of inflation. That is the first grounds for opposing this bill.

The second one, which I think is much more significant, is what this bill entails. And the issue with this is—and I’ve heard Mr Parker speak just before, talking about, in glowing terms, how GDP is increased, our taxes are up; yes, they are up—tax that the Government is now taking in is about $41 billion more than they were taking in when they came to office a mere five years ago, and that is because of tax increases. And, of course, what he forgot to add is that during the last little period, we borrowed an extra $60-odd billion, which has, basically, doubled our debt under COVID.

This bill is about further labouring and applying pressure on New Zealanders to pay more tax. That is wrong. I was at the Financial Services Council meeting last night—big soiree in Auckland—and talking to financial service providers. And everyone was saying to me, “Why is the Government putting up taxes; why is it imposing more taxes at a time when New Zealanders are struggling to make ends meet?”

This bill is one of those examples; a continuation of the philosophical approach that Mr Parker wants to take, which is, basically, wanting to claw at every opportunity to increase the tax burden that every New Zealander, company, individual, and entity in New Zealand has to pay. And that is why we are opposed to this. The changes to the digital platform economy, that Mr Parker spoke so glowingly about, again will impose additional costs on New Zealanders. And one thing that Mr Parker forgot to mention in these changes that have been introduced into this bill is that New Zealand now becomes at the bleeding edge of introducing the OECD reforms. So, in terms of companies that already have existing reporting requirements, that’s America and France; in terms of those who are looking at introducing new proposals, that’s New Zealand, Australia, and Britain. And so we are absolutely in a minority situation; even the EU hasn’t gotten to a stage of implementing the OECD recommendations.

Yet, Mr Parker thinks it’s appropriate that New Zealand should be jumping ahead of everyone else and implementing these proposals that will increase the tax burden on New Zealanders before other countries—and many of whom have taken a leading role in developing these proposals—and New Zealand’s taking a small part in it. We are jumping the gun on it.

What it means is that if you provide a listed service—and they include accommodation, driving, ride sharing, or food or beverage delivery—then the net end cost to you, if you go and order those services, if you go and book a bach for the summer holidays in January, the cost of that bach has now gone up by a net 6.5 percent. That is a direct result of this piece of legislation, and that means that every New Zealander is going to be paying more tax for stuff like going on holiday.

And the interesting thing is: this thing has not been so well developed that there’s not even a reference to a minimum level of compliance. So it obliquely refers to the OECD de minimus rules of 30 transactions or 2,000 euros. Not even in this bill have they set out the details of how this piece of legislation is going to work. It is premature, and we should be waiting to see what happens around the world, because the direct result of this is that New Zealanders are going to be paying more for booking a bach if they want to go on a holiday or want to get some food delivered at night. That’s the first thing about this.

The second thing is that Mr Parker said that this bill is about reducing compliance. Well, the second most pernicious part about this bill is it introduces a huge information requirement on platforms—New Zealand domestic digital platforms like TradeMe—to report on a quarterly basis all your transactional details and also about you personally. So Dr Deborah Russell might trade some goods on TradeMe, perfectly legitimately, and this legislation will now mean that she will have to recall where she lives in West Auckland, her IRD number, details about her personal affairs, and that will be all put in—and if it relates to property, it will require, around the certificate of title, detailed personal information about that, and that will be a requirement of TradeMe to supply that information to the IRD on a quarterly basis. That is a huge information dump that this bill now requires. That is hardly reducing compliance costs. This is a way to actually hoover up information and give it to the IRD. Now, perversely, if Dr Russell decided not to trade on TradeMe but she decided to trade on eBay, then her personal details would not need to be disclosed to the IRD. So guess where the criminal element are going to go! If you are trading products that you’ve stolen, what are you going to do? You’re going to end up trading it on eBay. This is how badly thought through this piece of legislation is.

The third thing is the now absolute requirement that all Government statutory levies are subject to GST. Now, we understand in the regulatory impact statement that there are about 220 statutory levies. The Minister cannot tell how many of those are not subject to GST. There are some that are not subject to GST, but it now means that every Government levy is subject to GST. Again, that means that every company, and an individual that wants to access that, is now incurring a high cost, even if they are not in a situation where they can claim back that GST. That is the third element of this bill that imposes further additional costs on ordinary New Zealanders and much higher compliance obligations on many of our digital platforms. This is a poorly thought through bill and one that we will reject and fight in select committee and through this process.

Let me tell you a story, a story about fringe benefit tax (FBT) on public car parks. A long, long time ago—well, maybe not that long ago—back in 2012, under a Government led by that party—National—there was a discussion paper introduced, and among the issues it canvassed was putting FBT on employer-provided car parks. I think perhaps none of the members over the other side of the House remember that because they weren’t here, but I remember it. There was a huge outcry about it. All the privileged people who had car parks and could drive into town and park in their employer-provided carpark were outraged that they would no longer have access to this, and there followed months and months and months of discussion, of outrage, of cries for change.

Eventually—eventually—after all the discussion, after all the debate, even though it was a tax change that was justified, even though it was a technically correct tax change, even though it would have provided greater fairness in the Income Tax Act, they folded—they folded—and they didn’t go ahead with it. So it took from April 2012, when the discussion paper was first introduced, until March 2013, before they finally folded on it—18 March 2013, to be precise—and what it did was it left an unfairness in place.

In this bill, we are fixing that unfairness. Because we know that there was no public assent to the FBT on car parks, we have decided instead that the way to achieve at least some degree of fairness is to exempt public transport from FBT. So, previously, if you drove—and still now, if you drive your private car—on the roads provided by taxpayers and park it in your employer’s car park, which is provided to you, there’s no FBT on that, but if your employer provided you with a train pass so that you could get to and from work, or a bus pass or ferry pass, then there was FBT on that. So there was a real disincentive for employers to subsidise public transport for their employees, but there was a positive incentive to provide a car park on premises. It’s madness. It is madness because not only was there unfairness in that, it did not do anything to alleviate our emissions burden that we need to alleviate in this country.

In this bill, from when this bill goes through, if an employer provides a bus pass, a tram pass, a ferry pass, a cable car pass, or a train pass to their employee so that employee can get to and from work, then there will be no FBT on that. That is an excellent reason to support this bill. It remedies an unfairness that has existed for a long time.

There’s two points to that story: one is because it introduces the issue of fairness; the other one is because last time around—last time around—the FBT proposal was defeated by politics, as, indeed, was the proposed change we had in an earlier version of this bill around introducing GST on some managed-fund providers. It is a technically correct solution, tax-wise.

💬 Simon Watts: Oh, you know best!

Indeed, I do. It is a technically correct solution. However, the politics defeated, and so be it. We’ll look at the issue another way; we’ll see what else we can do to introduce fairness in the system.

💬 Simeon Brown: What else do you know best about?

But, in fact—I know it’s best to have a Labour Government—it was withdrawn, and, quite correctly, the Minister withdrew it. So that is no longer in the bill. But there is this fantastic proposal around fairness and FBT. That fairness is also what underlies the changes to the platform tax proposals. It’s about ensuring that providers who operate through platforms are subject to the same tax burdens and benefits as other providers. It’s a straightforward fairness proposal.

I want to address just one further issue. The previous speaker for the Opposition, Andrew Bayly, talked about tax cuts, and he talked about the need for people to have more money in their back pocket. The tax cuts proposed by the Opposition would indeed put more money in some people’s back pockets. It would put more money in MPs’ back pockets. It would put more money in CEOs’ back pockets. It would put more money in lawyers’ and accountants’ back pockets. Now, I’m fine with people having more money, but these are not the people who need it most at the moment. The people who most need money at the moment are the people at the low end of the income-tax scale. The proposal from the Opposition would do nothing to address that, or, if they did, they would address it at $2 a week. That doesn’t make any difference.

I issue, finally, a challenge to the Opposition. It’s a challenge I have issued at a number of times in this House in the last few weeks, and never once have they answered it. “Tax cuts”, they say. But they will not tell us which services they will cut. How will the Opposition fund their tax cuts? Will they cut health? Will they cut education? Will they cut welfare? They do not answer this question, and I say to the people who are listening, every time you hear the Opposition, and Opposition member-proposed tax cuts, ask them to front up and say what services they will cut. If they do not say what services they will cut, it is a false promise and they are leading people astray. They must tell us how they will fund their proposed tax cuts.

This is an excellent bill. It is a bill about fairness. It is a bill that addresses the needs of New Zealanders. I commend this bill to the House.

Well thank you very much, Mr Speaker, for the opportunity to talk on the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2). It is “(No 2)” because, as we know, not everything that comes out of this Government in terms of the first pass actually has any degree of consideration or review in terms of the detail. What we know from this Government is that the first aspect of this bill—why this bill is called “(No 2)”—included an absolutely shambolic idea about increasing the taxation on KiwiSaver provisions for fund managers’ fees and all of the like, and that implication in terms of increasing of that tax was going to, in effect, bring in for the Government $225 million in a year.

What is surprising is that you’d think, when they’re sitting around that table, that they’d be going, “OK, let’s just keep an eye on, you know, maybe the things that will get our attention.” But for some reason that is unknown to anyone, I think, that piece of legislation, that element of this bill—why this bill is “(No 2)”, when we were talking about bill No. 1—was going to bring that degree of taxation. The only ones that didn’t seem to know that that was going to land like a cup of cold sick was the Labour Cabinet. Every single Kiwi picked up within 24 hours that that was an absolutely dumb idea. But the ones that missed it were that side of the House, and that raises some bigger concerns, I think, in terms of the Government, because how could you miss something so big—how could you miss something so big? How could you miss the fact that this change to the legislation is going to bring in, particularly, $109 billion?

💬 Hon Mark Mitchell: How much?

$109 billion by 2070—you cannot miss that. But, the reality is, the Minister in charge of this bill, the Hon Mr Parker, missed that element, as did his colleagues in the Cabinet of the Labour Government. That goes to the heart of why Kiwis across this country believe this country is heading in the wrong direction. They do not trust that side of the House in order to be able to fiscally manage the challenges that we have in this country, of which there are a huge number. They do not trust the capability or competence of those members on that side of the House to do what is required for this country.

National strongly opposes the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2) that’s on the Table today. The prior speaker Andrew Bayly has articulated some of the reasons why, but I want to go into a few other elements because, at its heart, this bill is missing an opportunity. It is not listening to the feedback of hard-working Kiwis across this country who are struggling day after day, week after week, because of the poor decisions that that Government are making. This bill is an opportunity, or could have been an opportunity, in order to remediate and to start doing something positive about that. But they have failed, and that is a great shame in terms of the opportunities that this could have come and addressed.

Part of this bill introduces the concept around the annual setting of income taxes, and National have been very strongly opposed around these tax rates. The reason why is that we have got significant degrees of inflation in this country: 7.3 percent, with wage inflation going at 3.4 percent. Take one after the other. We’re going backwards at 3.9 percent every single day, every week, every month, every year. The opportunity that this Government had in regards to this bill was actually making some adjustments to the way in which that tax bracket, or that fiscal tax bracket—changing that to take into account the impacts of inflation. That is such a simple thing to do. Do you know what? By simply doing that, you rapidly put that benefit into the paycheque of that hard-working person driving a concrete truck at Atlas Concrete in my electorate, working on the front line in terms of hospitality, our front-line police, our nurses—they would see the benefit of that pretty much in their next pay, straight away. The compliance cost is very little, but they’d get that benefit. But instead, this Government believes the solution to the cost of living crisis, which is now becoming a social crisis, is doing a cost of living payment and not actually adjusting within this bill the tax rates, which it should be. That is a great shame, and that is why I believe Kiwis can see this Government are not in touch with the key issues that Kiwis are facing at the moment.

The other aspect I want to get into is in regards to—and Andrew Bayly articulated it well—the information gathering and taxing the digital economy. Well, when I see statements around information gathering coming from that side of the House, from Government, you start to go, “Oh, well, we know what they are up to, don’t we?”, because every time they start going on a fishing expedition in order to gather information, we know what they are up to, because they cannot be trusted on taxation. They are up to no good, as usual. They are looking for ways in which they can fund their addiction to spending—and, gee, what an addiction it is. The problem with that addiction is it has consequences, and will have intergenerational consequences on every single Kiwi because of decisions they make.

So let’s get into the information-gathering aspect of this bill, because it is quite apparent, to me, that there are a number of unintended consequences which only come, quite simply, of the reality that this has been poorly thought-out, poorly planned, poorly executed, and poorly led by an ineffective Minister. But the elements within it are quite simple. How much do you think this will cost to implement this element of the legislation, and do you think the cost to implement will exceed the revenue gained? Well, you don’t have to do fifth form accounting—as it was in my day, or a little bit earlier—you sort of work out, well, maybe the benefits are going to exceed the cost.

I don’t want to get too simplistic, but I think most people would get the fact that surely the benefit will exceed the cost. But no, no, no; have a look at page 14 and page 15. In order to implement this wonderful ideological change—which no one else in the world, in terms of benchmarking, is at yet—it will cost $19.3 million. So what will the tax gain be from that? Well, surely it will be more than $19.3 million. The Hon Michael Woodhouse, what do you reckon? Do you reckon it will be a bit more?

💬 Hon Michael Woodhouse: It’ll be a hell of a lot more.

No. It’s actually $8 million less than the cost that it’ll take to implement it—$11 million. So quite at its fundamental level, it’s peanuts in the scheme of the total big picture, but the compliance costs that these guys just seem to ram through in terms of trying to do some ideological change—it absolutely has no consequence on hard-working Kiwis who need to see the benefit of smart Government decision-making today; not in the future. They’ve missed another opportunity, and they’ve missed it in regards to this. They have put, in effect, that cost of implementation—it has to be funded by someone as well, and guess who funds it! The taxpayer funds it. So the additional cost of the compliance in regards to that ideological element of this bill will fall on hard-working Kiwis, and, as a result, they have missed another opportunity to turn this country around. This country needs to be rebuilt, and this bill provided the basis, or could have provided the basis, to start us on this journey. But that opportunity has been wasted, that opportunity has been missed, that opportunity has been foregone, and that is a grave shame and a disappointment.

I want to, lastly, get back to the element in regards to what is going on that such poor legislation can get to this point where we are today. What are the failures within the system within the Government of the moment that are allowing such sloppy legislation to get through? Well, it is a failure to, in effect, adequately plan and a failure to actually have a plan in terms of where we’re going in the future. If these guys knew where we wanted to be in 12, 18, two, or three years from now, this would be a mechanical process, but it’s not. It’s reactive, it’s thinking off the cuff, and, as a result, we’re seeing legislation like this, which is absolute failure and will turn this country in the wrong direction. Thank you, Mr Speaker.

I have been listening very carefully to the speeches on the other side of the House and waiting for some interesting information. So far, it seems to be a regurgitation of a very outdated ideology.

This is an Act that comes to the Finance and Expenditure Committee every year, and I will be on that committee this year and I will be looking and welcoming the detail of it. But the first thing that I notice about the Act is that the tax rates don’t change; they’re exactly what they were. What was promised to be held was the status quo, and that’s what’s happening.

What the Opposition seems to be doing is putting up a proposal that they say they would go through with, which would, in fact, give the members of this House and people on high incomes quite large tax cuts. It would, in fact, give very, very little to most New Zealanders. It would give far less than the things that this Government has given that same income bracket in different ways: targeted responses to actually a pretty hard time out there.

So it’s no joking a matter that, in fact, the alternative proposal is one that involves people on $200,000 etc. getting thousands—$20,000 or thereabouts—in their pocket, while the New Zealanders who are on under $70,000 get very, very little. It does actually starkly contrast one party with the other.

What this bill also does is it gathers information and that seems to get the ire of the National Party as well. It gathers information about the gig economy. What would you have us do? Ignore, close our eyes and our ears to the fact that we have an evolving economy? We have an economy where a whole lot of people now trade services and goods on platforms that they didn’t used to use. Instead, the National Party seems to want us to not know what’s going on in that economy. Well, I put it to you that that would be a completely incompetent way to run a Government.

We absolutely need to know. What we are doing is we are actually joining the OECD countries in an effort to make sure that we modernise our tax system so it is fair; so people cannot subvert their incomes. So we are part of a group.

I think I was most surprised to hear there was a criticism that we were at what was called the “bleeding edge” of that by Mr Bayly. We are actually, I think, number four going into that regime. We are not the first, but I am actually proud of us being ahead of the game and doing these things in a timely manner. That is our job. That is what Governments do. The first thing that a Government has to do is make sure that it is taxing effectively and fairly. And that is what this does.

So I am very interested and keen on seeing the rules of the OECD countries applied here. It means we will gather the right information, we will know who’s paying tax, and we will manage the tax system accordingly. And that means that hard-working New Zealanders who work every day and pay their tax are actually only paying their fair share and not a great burden of it, because that is what a system that goes wrong does. When we have those systems, they are totally undermined and they undermine the trust of New Zealanders.

Whereas, I think, most New Zealanders know that, in New Zealand, the system is pretty fair. Top earners actually pay a bit more because they can afford to, and lower-income earners pay a bit less for the same reason—because they can’t afford to. That’s the New Zealanders I want to see this Act target, and it does.

We are also looking at GST in the gig economy and making that even. And I think that’s only fair. Let’s just take an example of the Uber drivers. The Uber drivers are all shattered little groups. So now, the platform that is producing that new kind of business will pay the GST. And that’s fair on our taxi drivers who’ve been doing so all along. It’s actually really, really important that we get that economy in proportion to other parts of our economy, and we don’t encourage one over the other. That’s an even playing field and it’s a damn good idea.

The other thing I want to talk about is build-to-rent, because, again, it shows a situation where we have a strong sense of common sense, because build-to-rents will be exempt from the interest deductibility—changes made last year so that build-to-rents will be encouraged, and that will encourage investment in the right places in this economy. I commend this bill to the House.

Tēnā koe, Mr Speaker. I’m very pleased to stand up and support this bill, the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2), and I’ll start my contribution by talking about the portion of this bill that directly relates to my member’s bill which is currently in the ballot, the Income Tax (Clean Transport FBT Exclusions) Amendment Bill, which was about evening the playing field when it comes to employer incentives for travel to and from work.

Long before I came to this House as a member of Parliament, I worked as a transportation planner, and my very first job was at engineering consulting services firm SKM, now Jacobs. One of my jobs when I was still doing my Master’s was project manager for the internal environmental management systems plan, which included the travel plan. For many people watching this at home, if they are employed by a large organisation like a district health board or a hospital, a university, a private company like Spark, they will have travel plans for their staff. The point of that travel plan is to provide incentives, support, and encouragement for people to travel to work in more sustainable ways. This can help the organisation, but it also helps the community around the city, because it helps reduce peak-hour congestion in the morning, but it also helps us with respect to our environment and our climate.

One of the biggest barriers to employers providing incentives for sustainable transport, like public transport, was the fringe benefit tax (FBT)—the fact that they’d have to pay fringe benefit tax on public transport passes. So what this bill will do is remove that. So all it’s really doing is a relatively small thing, but a very smart thing; it is removing the barriers for employers in providing public transport passes. The more people who take public transport, the better off we all are. Unfortunately, there are many ways in which single-occupant car use, especially at peak time, is unintentionally subsidised by the current set-up, and that’s one of the biggest drivers of congestion.

As Dr Deborah Russell alluded to in her contribution, back in 2012, there was a proposal by the Minister of Revenue Peter Dunne and the National-led Government to finally address this big subsidy, which was the tax-exempt status of employer-provided car parks, which is unfair for many reasons, but especially counter-productive because it provides a subsidy to people commuting by car at peak time, which directly undermines the goals of many cities to reduce congestion in the morning. Unfortunately—I remember very clearly that I was on the Finance and Expenditure Committee for that bill—the IRD officials at the time weren’t even looking at the transport benefits even though the New Zealand Transport Agency had published a research report talking about how changing fringe benefit tax settings could help achieve better outcomes for our transport system. IRD was looking at it purely from a revenue point of view.

And what was really notable, and this is also related to another part of this bill, is that when we were at the select committee—so the bill had already been introduced, had been through its first reading, the National Party had supported this at its first reading—the big end of town got together with the Employers & Manufacturers Association (Northern) and launched this big campaign against the “car park tax”. Unfortunately—I know there were some of my colleagues in the Labour Party who agreed this was a sensible thing and were going to support it—the Labour spokesperson for revenue at the time was David Cunliffe, and he saw a populist opportunity to jump in there and attack the Government over the car park tax, which was unfortunate, I thought.

It just shows how vested interests who want to maintain the status quo, who are only thinking about their sort of narrow, selfish interests, can be very organised and mount a successful campaign against making the tax system fairer and making sure it works for our communities and our environment. This is one of the things that the Green Party will continue to call out, and we hope to change, because ordinary New Zealanders would have been better off by this change to bring employer-provided car parks into the FBT regime 10 years ago. We would have had huge benefits over those 10 years. And, of course, the value of an employer-provided car park is about the same as an annual public transport pass in most cities. So we missed out on benefits for 10 years because of, quite frankly, a misleading campaign which claimed some massive cost. It actually massively overestimated the number of car parks in Auckland city centre, but it was very effective.

And we saw a very similar, rapid campaign mounted against the original version of this bill, as it was introduced, to try to tidy up GST with relation to financial services related to KiwiSaver. I think, if anyone watching at home wants to read a really enlightening article about that, there is an article by Tom Pullar-Strecker from Stuff which talks about how, really, the numbers used in that very brief and effective campaign against that change were really overestimating the cost to KiwiSaver. Really, this is just about some financial services being treated equally, with respect to GST, as other providers of services in New Zealand. Interestingly, if you’re going to count the compound impact on KiwiSaver, you also have to count the compound benefit for the Government of having that additional revenue, and having it compound and offset borrowing costs of that time. Actually, all of New Zealand would have been better off, and is better off, from a fairer approach to raising revenue.

Here I have to speak to the Opposition National MPs’ very classic speeches on this bill, where they, along with the vested interests who benefit from the status quo, attempt a framing of the debate that is quite misleading, that demonises any change to our tax system, when, in fact, there are huge benefits to all New Zealanders of a fairer tax system. We do raise revenue to purchase things together, because it’s more efficient and it’s better for all of us if we purchase these things together, like healthcare, public health; like education, our schools; like our infrastructure. Those are things that we’re all better off by purchasing together than leaving it up to individuals. The National Party and, of course, the ACT Party engage in a kind of framing that comes from the 1980s that demonises tax, and it’s really misleading. It’s a kind of divide-and-conquer approach, because what they say to ordinary, middle-class New Zealanders who aren’t earning high incomes is “The Government is going to tax you.”, when, in truth, the proposals the National Party puts forward are all about helping those who already have money and property get even richer at the expense of everyone else, basically. That’s the truth of it.

You can see that really clearly. If we look at the Australian tax code—

💬 Matt Doocey: How’s equality under your Government?

I mean, I do think it’s fair to say that those New Zealanders who are on lower incomes, who work multiple jobs, are overtaxed relative to the very wealthy people who earn higher incomes, and particularly those who earn their incomes from property and assets, who just sit back and let their property inflate in value and benefit from that.

If we look at something like our neighbours in Australia and their tax code, they don’t have any tax up to A$18,000 a year, and then their marginal tax rate is higher. So, if you earn A$120,000, you pay 37c on the dollar for every dollar over that, and if you earn over A$180,000, you pay 45c on the dollar for every dollar over A$180,000. And Australia has a capital gains tax. I mean, it’s not as ambitious as it could be, but they do have a capital gains tax. So, when we look at countries we aspire to be more like, they have more progressive tax systems, the wealthier pay more, the property owners don’t get away with it scot-free. They actually make contributions on their capital gains and, by doing so, the country can invest in those core public services that make sure that everybody actually has an equal go. I mean, we’re nowhere near that, of course, but we can aspire to be more like that.

So the Green Party will be supporting this bill. We’re happy to see the removal of fringe benefit tax on employer-provided public transport passes. We would like to see other changes to fringe benefit tax to incentivise other types of sustainable commutes, like e-bikes, bikes, maybe even a reduction for electric vehicles or zero-emissions vehicles, and we would like to see the loophole really closed and enforcement finally come in on the exemption around double-cab utes, which is clearly being exploited and leading to a real proliferation of large, double-cab utes, when they aren’t really needed for work purposes, simply as a means of tax avoidance, which has unintended negative consequences for our transport system.

💬 Ingrid Leary: Mr Speaker.

💬 Damien Smith: Mr Speaker.

💬 DEPUTY SPEAKER: Damien Smith.

Thank you.

💬 DEPUTY SPEAKER: Mr Smith, you could do with some more spring in getting to your feet because—

I was respecting the member across the way.

💬 DEPUTY SPEAKER: Well, of course, if the other member had taken the call, yours could’ve been lost. So I just would—

No.

💬 DEPUTY SPEAKER: Mr Smith, I could just suggest to you, keep an eye. So you have the call.

💬 Matt Doocey: He’s a respectful man.

No room for respect in Parliament. The Labour and Green parties continue their mind-set and tradition of believing that taxing us into prosperity is going to work.

💬 Hon Julie Anne Genter: It does. Look at Denmark.

And they’re going to use countries and comparisons that are not even relevant. The spending in this, the taxation bill, is showing that the Government is short on cash, and tax ultimately is politics. Tax is politics because this is bill No. 2. When the public backlashed against the GST treatment of KiwiSaver, even though it was complicatedly explained and was misinterpreted and people did get the wrong end of the stick, it ultimately did say something, though, that there’s something wrong at the IRD where they can just slip something into the Government’s Minister and it’s included—the same thing on the bleeding-edge stuff around this platform economy, which is that they just want gold stars from the Ministers, and the Ministers aren’t really checking the detail. That was a highly embarrassing setback for the Government in terms of having to take that last bill off the Table and replace it with this one.

Doing my numbers, there might be enough money here with GSTs on GSTs to claw back the cost of living payment, and that’s probably been one of the objectives. You know, there was a time in life when Benjamin Franklin said, in 1789, that there’s only two things certain in life, death and taxes, but now you can be dead and get a payment. So I think the Labour Government has redefined Benjamin Franklin’s statement. Mr Smith will say that there’s three things certain in life: death and taxes, and, in New Zealand, you can get a bonus back if you want to, if you want to stick your hand up and pull it out.

This bill, I have to say, though, would’ve been the perfect set-up for a capital gains tax to be introduced by the Labour Party. But, unfortunately, as Jacinda Ardern said, it won’t happen while she’s still here. But it’s no doubt that the ambition of the Green Party is to bring in a capital gains tax. Also, they have this misconception that our tax policy at the ACT Party is just about rich people. It’s not. Anybody under $70,000 will get a flat rate 17.5 percent tax rebate, and anybody above that will get 28 percent, and we will kill the 39 percent envy tax rate because it doesn’t actually contribute much revenue at all. It’s just an ideology that they have produced.

So also the brightline test and interest rate deductibility will be scrapped. On cross-border workers, we thought that the non-resident contractors’ tax should’ve been abolished completely. So there’s a halfway house there.

The bill clarifies that any changes that are payable because of law changes or regulations will go to the Government coffers. The one thing that does seem to have slipped away is that—maybe Mr Robertson wants this to happen—we’re all due refunds of GST on earnings through ACC, but nobody’s really talking about that. It’s something I hope in the next stage of this process that is addressed by the committee in question.

So, you know, the IRD gold star sticker system we think needs to be addressed. There’s stuff coming from there that even other countries around the world aren’t doing, which, you know, makes us embarrassingly early in terms of just putting cost and burden on our systems and not on anybody else’s.

The build-to-rent GST benefits to developers—that is very questionable, and the councils should’ve been involved with that. Dual resident companies and dual residency—there still is a lot of issues to work out with the Australians in this bill, and that’ll be the next stage.

So, in the digital economy aspects, even though we’re at the cutting edge of this, the next paper that will come through will be Pillar One and Pillar Two OECD rules. So it looks like everything the OECD wants, we’re not going to just accept as a given here in New Zealand. Well, that is strange because last night I got my bill rejected working with the OECD. You know, I’m not feeling bad about it, but it looks like that’s the pan-organisation plus the World Bank which will affect our taxation philosophy.

So the sooner we have a look at how the Government spent its money on COVID and advertising and initiatives around the green space and get a royal inquiry into COVID, which I know my colleague Miss Swarbrick is very keen on, we will begin to understand the stress that the tax base is under. Even though people have a perception that GDP is rising, if you strip out the costs of agricultural price increases in the last quarter, all the underlying factors are deteriorating. So it’s not as rosy as people make out, and we have to accept that we’ve got a lot of work to do with the economy.

So, at ACT’s side of the fence, we believe in giving the money to New Zealanders to spend themselves and not by this Government. Inflation has assisted this Government in terms of its tax take. It’s actually incredulous that some of that hasn’t been passed back to the citizens of this country. On the last point, we believe that the tax bill at 39 percent as the top rate just showed that there was no thought or thinking going on here. The cost of living payment at the eleventh hour, the withdrawal of this bill around GST and KiwiSaver, and the presentation of bill No. 2 shows that, you know, things are just getting made up on the hoof, and this should’ve been settled down into something really, really steady and strong. So if the Government is short on cash, we can expect to see more taxes. If the Greens want their agenda fulfilled, we will have the spectre of a capital gains tax going into the next election, and that may prove unpalatable for the people of New Zealand.

So the bill cleans up several aspects of the GST code, which I’m sure the accountants will be happy about. But, on the macro picture, we believe that it hasn’t addressed the dynamics of a post-COVID scenario. Within the COVID scenario, it has led and shown that the inefficiencies around Government spending have caused us problems in balancing the books, and there isn’t much more left to take in the tax take.

So we oppose this bill, and we will look to the committee for refinements, certainly around ACC levels, and we will watch that closely. The cross-border regulations are another aspect that need to be looked at immediately, and we hope there’s some work done in that area. ACT opposes the bill.

Thank you, Madam Speaker. I’m a little bit baffled by the last speaker’s reference to dual residency and saying that this is something that needs to be looked at, because, actually, this dual-residency question is one of the significant changes that this bill introduces which bring significant benefit to business. It hasn’t actually been discussed much in the House. So I will turn my attention to it in my contribution this morning.

It comes as a result of uncertainty on corporate residency tax. So that’s when the majority of directors could be, say, from Australia, a New Zealand company that has all its operations in New Zealand could actually be considered a dual tax resident, and then that has some flow-on effects currently which would disadvantage it. That comes about from recent changes in the Australian Taxation Office which has led to the ambiguity. So, to follow Michael Woodhouse’s analogy on rugby, it’s a little bit like the Aussies claiming our New Zealand All Blacks, simply, say, the coach was an Australian, and all the All Blacks and the games happened in New Zealand—that is currently what could happen with this ambiguity in the tax changes.

So, under the New Zealand current rules, there are several benefits that can be claimed in these tax regimes. One of them is around forming consolidated goods. Until now, that has been for New Zealand - only companies. What that, basically, means is that wholly owned groups of companies can be considered, for tax purposes, as one group, so their assets, transfers, dividends, interest, management, fees, and so on, can be considered together.

Secondly, there’s the sharing of tax loses. So that’s sharing losses between loss- and profit-making companies where there’s at least 66 percent shared ownership.

And thirdly, the utilisation of imputation credits. So that’s about a fair and transparent spread of tax burden and benefit between shareholders and a company. So imputation credits, basically, mean tax credits can go to shareholders, and if the imputation credit account is in debit, a company could be required to pay more tax.

Now, these benefits don’t normally apply to non - New Zealand resident companies. So what this bill is seeking to do is to ensure that New Zealand resident companies can continue to have those benefits, even where they’re considered dual resident by Australia. So the question then becomes: when is a New Zealand company a New Zealand resident? Basically, if it’s incorporated in New Zealand, if its head office is in New Zealand, or if the centre of management or the directors control the company in New Zealand.

None of that was ambiguous until 2017 when there was a case called Bywater, where the Australian tax company revised its views on residency and made it possible for New Zealand companies to be considered dual residents if the majority of their directors were based in Australia. So that would be even if there was no trading or no investment overseas. Now, that hasn’t been determined yet. At the moment, it’s still the status quo, but that case law has opened up the possibility for New Zealand companies to be disadvantaged, should that happen.

The other point I’d just like to pick up is around compliance and the Opposition saying that there are heavy compliance costs. Actually, what this bill seeks to do around GST is to reduce compliance costs, particularly, again, for overseas situations around PAYE, around employing overseas contractors. It has been a headache for business, particularly if they were expecting an exemption and the exemption isn’t granted. What the bill seeks to do is, basically, simplify the process—so, for example, with PAYE, allow it to be paid annually by New Zealand companies, rather than monthly.

So, in summary, these international compliance benefits are nimble, thoughtful, and good for business. They protect New Zealand business from a dual-tax burden, and that’s a great thing. And it’s just something for us to bear in mind as we consider what some of the significant benefits are of this bill that haven’t actually really been raised until today.

The next call is a split call. I call on the Hon Michael Woodhouse for five minutes.

Thank you, Madam Speaker. In what I think was one of the great malapropisms of the 53rd Parliament, the Minister of Revenue, at the end of his first reading speech, said the following words: “It gives me great pleasure to amend the bill to the House.” Actually, he stopped himself and ended up saying he commended it to the House, but I reckon he was right the first time. He sure amended the bill to the House, because this is the bill that has the biggest U-turn from a Minister, who folded like a red hot Mars bar within 24 hours of tabling the bill in the House. So, boy, it’s been amended, all right.

Here’s the other scandalous part of this bill: it contains the biggest hidden hand grenade in Parliamentary history, a $100 billion tax grab that nobody was talking about. When they talk about transparency and the efficiency of the tax system, I think every single member of the public and of this House should remember that this is the Government that hasn’t seen a single thing it doesn’t want to tax. And if there was that hidden hand grenade—that big and that obvious to spot, once the economic and tax commentators saw the eyes of the bill—what else is in this bill? Because as Deborah Russell lectured us—a history lesson on the car parks and fringe benefit tax in 2012—what she did say, eventually, was that that policy never made it to a bill. The reason it didn’t was because the previous Government honoured the generic tax policy process. It set up the small business Tax Working Group and it used the expertise that exist in New Zealand to help it fashion good tax policy that’s consistent with our broad based, low rate, and administratively efficient taxation system.

All of that, it appears to me, has been thrown out the window, because, for the stuff that we do know in this bill, there are some really ridiculous and inefficient taxes. The most obvious one of that is now euphemistically known as the “Uber tax”, where drivers—they may be university students, they may be part-time parents, they may be people supplementing their income and earning less than $60,000, the threshold for registration for GST—are now going to have to jump through a hundred hoops and get their calculators out for this extraordinary netting of the 15 percent GST that’s going to be imposed on the fares; keeping some and giving some back. If that’s administratively efficient, I’ll eat my hat.

Now, if these are the things we know about this bill, and given what we heard from the Government when they first introduced it, what other hidden hand grenades are in it? I look forward to the Finance and Expenditure Committee really getting deep in the weeds on this because, at the best of times, these remedial matter taxation bills are pretty pointy-headed, and it does require the attention of the Finance and Expenditure Committee—

Chlöe Swarbrick: Great committee.

I have no idea what that member is saying behind the mask.

Chlöe Swarbrick: Great committee.

Great committee. Well, it’s been better. I’ll sound like the grumpy drunk at the end of the bar, but it was better in my day—it was better in my day—when I was the Minister of Revenue. We wouldn’t have introduced a bill with a hundred-billion-dollar hidden hand grenade. And, boy, the Finance and Expenditure Committee would have gone through this with a fine-toothed comb. I encourage the member Chlöe Swarbrick to get deep in the weeds on what’s in here—

💬 Jamie Strange: Don’t mention weeds.

—because if it’s about fairness—that’s right, that’s another referendum we’ll be having. If it’s about fairness, and if it’s about administrative efficiency, she should put that lens on and make sure she listens very carefully to the tax experts, who will be engaged by the committee and brought in as submitters, because if there are hundred-billion-dollar mistakes that we can see, and ridiculous policies like the Uber GST policy, there are bound to be several others.

We oppose this bill. We oppose this bill because it’s philosophically the wrong thing to do and will set this economy back. But, actually, we oppose it because it’s an inefficient, poor process, and it should be better. Good luck to the Finance and Expenditure Committee; good luck finding the hidden hand grenades.

Thank you, Madam Speaker, for the opportunity to take a call on this bill. Look, there’s some excellent—excellent—stuff in here. I’d like to start with the fringe benefit tax exemption for public transport and just sort of tease that out a little bit.

The biggest challenge we face as a country is climate change. It’s the biggest challenge we face as a planet. The focus has been on COVID over the past few years, in a way that sort of masked what the key challenge is for the planet, and that is climate change. In New Zealand, our transport emissions make up 20 percent of our emissions—a significant amount—and I’d like to acknowledge the work that this Government is doing in terms of reducing our transport emissions. This piece of legislation is another example of that. So the bill proposes to exempt public transport from fringe benefit tax where bus, train, ferry, tram, or cable car services are subsidised by an employer, mainly for the purpose of their employee travelling between their home and place of work.

Now, just to put a local context on this, there are a number of businesses in Hamilton who are actively already doing this and others who are having conversations around it with the likes of the Waikato Regional Council and myself, around what they can do. We’re also seeing Government agencies start to move into this area, which is really, really good to see. Now, today is World Car Free Day, and I’m sure there are members in the House and constituents of members in this House who would be asking the question, “Well, what sort of public transport could I take? What sort of public transport could my employer potentially support me with and, obviously, be incentivised to do so because of the exemption of the fringe benefit tax?” Well, there are a number of examples, and more examples springing up all the time.

One would be the Te Huia passenger rail service between Hamilton and Auckland—excellent, excellent service. In fact, I feel like we are the envy of many other regions across New Zealand because the investment of this Government and the support of local councils in terms of getting this through. Now, in August, 5,698 passengers took the Te Huia rail service.

💬 Hon Member: How many?

Yeah, 5,698. Now, that’s over 5,000 cars off the road, so it supports with congestion as people travel.

💬 Hon Michael Woodhouse: Is he talking about Te Huia?

I am talking about Te Huia—the Te Huia passenger rail service. I’m sure the member’s constituents down in Dunedin would be envious of this Te Huia passenger rail service, because as I travel around the country, people are talking about regional connections—how we can improve regional connections.

For those who have not taken the Te Huia passenger rail service, considering I’ve been encouraged by the other side to talk about it a little bit more, the comfort of the travel is absolutely remarkable. You can sit down at a comfortable seat. You’ve got a table, you’ve got charging points, you’ve got Wi-Fi. You can open your laptop. You can work all the way between Hamilton to Auckland or Auckland to Hamilton. There’s a cafe on board. There’s a bathroom on board. I’ve taken my family with me a number of times. And the best thing is Hamilton to Auckland, $9—$9 from Hamilton to Auckland; $18 return, obviously. And there’s even cheaper fares for those who take their family. So, recently, we took our family from Hamilton and went up to the Strand, and then we nipped across to Devonport—a lovely part of the country—spent some time there, and then we hopped back on the train and came back home. It was a really lovely day; really family experience.

💬 Hon Todd McClay: How much did it cost the taxpayer, when you did that?

Well, it was about $20, maybe 30 bucks for the whole family—for the whole family to go to Simon Watts’ electorate.

Look, there’s more I could say about this area, like the FlixBus and other exciting things that are happening, many of it being led by the Waikato Regional Council, councillors like Angela Strange, just picking one just randomly. Excellent piece of work going on in that space. A good piece of legislation, I commend it to the House.

Kia ora, Madam Speaker. I commend the previous speaker, Jamie Strange, and the Te Huia bus service—about which there was some raruraru from the other side of the House coming on. But I’m definitely envious, as the member of Parliament for New Plymouth. Trains are constantly talked about in my electorate. We seem to be constantly having meetings of people about how, actually, could we continue to decarbonise; how could we continue to get trucks off the road; how could we actually get passenger services back? Te Huia is a good example of something that’s “slow and steady wins the race”, I say—that’s my mantra in my life.

But, anyway, we’re focused on this bill here around taxation this afternoon, and I just wanted to focus really briefly on that appropriate tax treatment when it comes to making it fairer. As someone who ran an accommodation business for about four years, it was always frustrating as we used the traditional means—advertising through websites online, through the local information centre—and the regulations and things we had to follow as an accommodation business. Whereas we had Airbnb come along, we had Bookabach come along, who in many ways—when it comes to Airbnb, obviously, it wasn’t a fair and reasonable service in terms of the regulations. We have the councils, but, of course, then there were the GST and the tax challenges.

So this piece of legislation talks about creating that appropriate tax treatment when it comes to ride sharing, when it comes to food and beverage deliveries, when it comes to visits and accommodation and services provided through apps. Obviously the world is changing, and changing rapidly; we need to ensure that we are changing with it.

So that’s my simple contribution this afternoon, because we just want to get on the select committee and do the work.

There’s not a single problem in this country that the Labour Party and the Labour Government does not think they can fix with tax. It is always a new tax. It’s often hidden. You don’t often see it. They talk up how low the tax burden is upon New Zealanders, but, actually, that’s a party that believes that people should pay more of their own money that they work hard to earn to the Government, and the Government is better to redistribute it, to give it back to them, and when this Labour Government gives it back to them, they want them to be grateful for it.

Well, National has a very different view. We trust New Zealanders with their own money. We back New Zealanders who work hard to get ahead, and we think they are best placed to decide how to spend their own money. A Government should only take the amount it needs; it shouldn’t take more than that. That’s something that is a foreign concept to almost every single MP in Government at the moment, except for the Assistant Speaker Jenny Salesa, who is the wisest woman I’ve met on that side.

Does anybody in this House, apart from the Opposition and almost every single New Zealander who gets on Facebook to rail against the spin that comes from this Government, remember that, on 2 May, the Prime Minister, Jacinda Ardern, from New Zealand—one of the infrequent times she’s actually in New Zealand caring about what’s happening here to Kiwis, not overseas, jumping on aeroplanes to fly around the world with the Prime Minister of Canada—said there would be no new taxes?

💬 Ginny Andersen: Stick to the bill.

I will stick to it. Jacinda Ardern, on 2 May, said there will be no new taxes. Then, very, very quickly, the revenue Minister had to withdraw a bill faster than he had put it through Cabinet to say, “Actually, there’s a slight error there, because we have listened to New Zealanders. It’s not a new tax; it was a loophole. But we’re now OK with that loophole because the public noticed.” Of course, that was the raid that the Labour Government, Jacinda Ardern, made on people’s KiwiSaver, and as soon as the public noticed, it didn’t slide under the radar; they took it out of the bill.

But they’ve brought this piece of legislation back, and if you have a look at it, at the very beginning, it amends the Goods and Services Tax Act. It’s not making the goods and services tax—GST—easier, but getting more tax from hard-working Kiwis. It amends the Income Tax Act. Is it lowering taxes on hard-working Kiwis? Is it saying they should keep more of what they earn? Is the amendment to the Income Tax Act saying, “Actually, because of inflation and wage inflation, you are now paying more tax than you were when Labour came to Government.”? No, it’s not. It’s keeping the rates where they are, so hard-working Kiwis pay more. It’s amending the Tax Administration Act, not to make it easier for people to pay their tax, not to reduce burden or bureaucracy—actually, they will say, “We’ve found some more loopholes.”, which is code for the Labour Party to say, “We are raiding your back pocket. We’re coming after more of your tax, New Zealanders, but we are dressing it up so you won’t notice.”

Then, the Income Tax Act 2004 is being amended again. My gosh, what is the Minister trying to sneak past New Zealanders now as a result of that? Well, we’ve heard that the Finance and Expenditure Committee will look into that, but it won’t, because, actually, the public has a right to have no confidence in the chairmanship of that committee. Or if we look at what they’ve done previously, railroaded things through as quickly as they can, not interested in listening to the experts or the public, actually just doing what the Government has said, “Pass this law as fast as you can, because we have spent too much. We’ve borrowed too much, and we need more money.”

Again, on 2 May, Prime Minister Jacinda Ardern—one of the rare glimpses we’ve seen of her in New Zealand recently—was saying there would be no new taxes. Well, there was a ute tax. Every single person buying a petrol vehicle, a diesel vehicle in New Zealand, farmers driving utes—there is a ute tax. There was the Auckland regional fuel tax. It’s not actually helping Aucklanders at all. It’s making their petrol and diesel more expensive. It’s not giving them roads. It’s not giving them rail, because this is a Government that can’t actually deliver. It’s just taking more money out of their pockets with the promise of one day—one day—this Government will fix them.

There was the tenant tax. Do you remember that, that loophole: the tenant tax? What that said was that if you are a landlord in New Zealand, if you are renting out your property, you must pay tax on that. Well, we get that. Of course, every single landlord taking in rent has to pay tax. They fall within the tax system. But the Government said, “Ah, we’ve found a loophole. You see, although they are running a business and they are having to pay tax in that respect, what they are not allowed to do anymore is claim back the interest on their mortgage.” You know, that’s the thing about business and that’s the thing about GST: you only pass on the difference between what you’re paid out and what you’ve earned. But not with this Government. They said it was a loophole and now landlords can no longer deduct interest from the income that they earn from the rent.

What does that mean? Number one, rents have had to go up, but, number two, it’s not quite as straightforward as that, because the Government has said, “We’ve found a loophole and we’re closing it down because we want more tax. But if you rent to the Government, don’t worry about that loophole. If you rent to the Government and we put people in your house, then you can still make the tax deduction.” Do you know what that’s saying? It means that this Government can’t deliver on its promises, it can’t fulfil them, and it hasn’t fixed the housing problem. It has no idea how they’re going to tax people more, because they need more money to waste on things and, at the same time, give themselves incentives to get ahead.

I come back to the KiwiSaver tax. Well, at the forefront of this piece of legislation that was rushed through Cabinet and then withdrawn from this House even more quickly was the GST raid on people’s KiwiSaver. But there is more, and the last speaker in the debate, Glen Bennett, was saying that when he was running a small accommodation business, he found it extremely unfair that he had all these council rules placed upon him but others on platforms did not.

Well, it’s as straightforward as this. The GST system is a very easy one to understand. If you earn or expect to earn more than $60,000 a year, you must register for GST. You must collect it, you must pass it on to the Government, but you get to keep any GST that you’ve paid. It’s worked for a long time. It’s one of the best systems in the world. It has one rate; that’s it. If you are a foreign company and you provide goods or services to New Zealand—more than $120,000 a year, I think it is—you too must register for GST, which is something that the previous National Government passed for fairness and transparency. But if you are a New Zealand company, a New Zealand tax resident, you must only register for GST if you expect to earn $60,000 and above. You may register below it, but you don’t have to.

What this piece of legislation says to every single New Zealander, irrespective of how much you earn when you provide a service, if you are doing it on a platform, 15 percent GST will be collected from what you earn or on top of what you charge, which means hard-working Kiwis pay more to the Government, and those that are providing a service in New Zealand—perhaps they want to earn $5,000 or $10,000 a year so they can afford to pay the excessive cost increases they have seen as a result of a Labour Government, and then we are coming to raid your back pocket again: “We want 15 percent off you, but we’re not going to let you be part of the GST system and therefore write off your costs against GST; we’re just going to have a really strange system to give you a little bit back.”

Well, everybody wants fairness when it comes to tax. Nobody wants to pay tax, but New Zealanders are good at it, because it’s fair, is transparent, and it’s open. But what they don’t like is a Government that rides their back pocket, takes too much tax—because they believe they are better at spending Kiwis’ money than those New Zealanders who work hard themselves—and sneaks bills through Parliament without full disclosure of what they mean. Kiwis will be worse off as a result of this.

Yes, the Government will have more money, but they’re not going to spend that more carefully. They’re not going to come with good projects to help people. They’re going to continue to waste it. I don’t know—what about another $50 million on a bridge for cyclists over the Waitematā Harbour that will never be built, that they’re still paying contractors to design, because of the contracts that they signed? That’s a great use of money, isn’t it? Well, it’s not helping anybody in the Rotorua electorate. It’s not helping anybody in a single electorate in Auckland. This legislation will not help New Zealanders who work hard, who pay more than their fair share of tax, who are overburdened, who are facing huge cost increases. This is a Government that just wants more money out of their back pocket. National doesn’t support this. We think Kiwis are already taxed too much.

Here’s a suggestion for the Government: spend more carefully. Every single household in New Zealand is having to be cautious and careful about what they spend. Why shouldn’t the Government do more of that? You don’t have businesses saying, “I know what we’ll do. We’ll just go out and magic up a bit more money and say it’s a loophole. Thank you. I’ll pay the bill.” No, they can’t do that, but this Government believes that they can.

There’s not a single problem in New Zealand that the Labour Party and the Labour Government does not believe tax won’t solve. They are wrong. Kiwis work very, very hard. They earn their own money. They are best placed to decide how to spend it. This Government should keep their hands off it. But here’s my guarantee: they’ll rush this through the committee. They’ll rush it through the House. They’ll say thank you very much, and then they will give it back to New Zealanders and expect them to be grateful. National will be voting against this piece of legislation.

What an entitled ramble of twaddle that was. The world according to Todd McClay would be a sad little island of individualism, and I would not want to be on it. But I am not going to be turned down, because the borders are open and New Zealand is open for business once more. It’s a time for good news. We need to prepare for the return to normal economic activity, and that means ensuring that tax rules are appropriate and operating as intended.

It’s interesting that the member who has just resumed his seat, Todd McClay, was speaking about how this bill was going to stop Kiwis from keeping more of their hard-earned money, when, in fact, a big part of this bill is fairing up the level playing field. Platform businesses that use things like Uber or overseas companies that are not paying GST in New Zealand is not doing it fair. So I would argue that those individuals are not Kiwis; they are overseas entities that need to pay their fair share of tax and GST in New Zealand.

The platform economy in the bill refers to a new part of our economy. Using apps, you can hail a car or get some Airbnb or get some food, and it’s only right and fair that they need to pay the GST that they should be paying, operating in a New Zealand economy. As these platforms typically operate across borders and are based in other countries, this information reporting and exchange measure will provide tax authorities with the information about the income earned by sellers on these platforms. It is critical to a smooth functioning of the tax system to know what’s actually going on in it. But there’s more in this bill. It does a whole lot more. It looks at, also, some really good benefits in terms of fringe benefits on public transport, to make sure that we are making that trip from home to work—that there should be some good incentives for people to get out of their cars and use the excellent services that are local transport available right across New Zealand’s main urban centres.

Also, it’s fair to mention that homes built specifically as rentals can play a major part in providing for New Zealand’s rental market. And, while there are not enough affordable homes to buy, there are also not enough affordable homes to rent. The objective of the interest limitation rules contained within this bill is distinctive to investor demand for existing properties, and instead investment in new housing. Investment in rental housing is just as important as investment in houses for first-home buyers, and it’s only right and proper that we should make adjustments to make the tax system fairer in that space.

I’d like to also point out that the Government wants to ensure that the tax system minimises the compliance cost on taxpayers. The tax system also needs to keep up with modern business practice and changes to developments abroad, and it’s really sad to see that the National Party is not interested in moving with the times. They don’t want to take account of how the digital economy has evolved; they would much rather stay in the Dark Ages and give themselves all a tax cut so they’ve got some more money to spend on themselves. And that’s largely what the whole modus operandi of the National Party is. I think that’s rather sad.

So what else does this great bill do? This bill also looks at some other areas that we need to tidy up to make the tax system fairer. It proposes to modernise and enable greater flexibility in the rules applying to the tax treatment of cross-border workers. It aims to clarify how pay as you earn, withholding tax, fringe benefit tax, also employer superannuation contribution tax, and non-resident contractor tax rules apply in relation to such workers. All these measures are needed to make sure that the playing field is even and it’s working well.

I’m proud to be part of a Government that is making our tax system keep up with modern business practices and change to new developments that we need to keep abreast of all that the digital economy is doing right now. I commend the bill to the House.

The question is, That the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2) be considered by the Finance and Expenditure Committee.

Motion agreed to.

Bill referred to the Finance and Expenditure Committee.

Instruction to Finance and Expenditure Committee