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).

ASSISTANT SPEAKER (Hon Jacqui Dean): 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 second time.

The second reading of the bill is, of course, on the form of the bill that reflects the changes that have been recommended by the Finance and Expenditure Committee following public submissions, as well as a small number of other changes that were included as raised by officials. The main provision in this bill, other than the setting of annual rates, is addressing a gap in the GST treatment of the platform economy—that is, services where an app on a phone or a computer is used by a customer to order, for example, a driver who provides ride sharing, or the app is used to hire a holiday home from a host. Of course, members will know that the services that are provided are being provided in New Zealand, they’re being paid for by a New Zealand customer, they’re being delivered by a New Zealander, but because technically some of those transactions can be, through the platform, said to be contracted outside of New Zealand notionally, they do not attract GST according to current rules.

The OECD recognises this is an issue of global concern, and it’s leading a multilateral effort to assist it. So the bill does this by requiring digital platforms to collect and return GST on the supply of those services, like ride sharing and short-stay accommodation. Not implementing rules like this would mean that New Zealand - based competitors are at a disadvantage against those who are providing services through apps. Now, in New Zealand, GST applies to almost all goods and services supplied in New Zealand. It’s what makes it simple and fair and efficient, and it’s impossible to justify why GST shouldn’t be charged on holiday accommodation or ride-share services where their competitors are paying GST. It’s one of the reasons why submitters like Hospitality New Zealand submitted in favour of this bill—as did the New Zealand Taxi Federation.

I’m not the first to make comments to that effect, and I’m going to make some quotes made earlier. This is a quote from Nicola Willis on 1 September 2002: “It’s about fairness, ensuring motels are treated the same as Airbnb and Ubers are treated the same as taxis.” This is exactly what Nicola Willis said then but has now resiled from. I would quote the former revenue Minister Todd McClay, who in 2015—when National introduced GST on online services which became known as the “Netflix tax”—said that the bill was “about creating a level playing field for collecting GST and putting New Zealand businesses and jobs ahead of the interests of overseas suppliers.” And then, in May 2016, the former revenue Minister the Hon Michael Woodhouse said, “Currently New Zealand providers are at an unfair disadvantage because they must apply GST to their services, whereas overseas providers do not. This creates an unfair playing field which this legislation will eliminate.”

Those were all valid comments then, and they remain valid now. There’s been a bit of misinformation parleyed about, including by members of the National Party who claim that this is going to result in a 15 percent increase in cost to those providers and that this will then cause an increase in prices of 15 percent. They’re wrong for a number of reasons. A credit is given for the GST inputs that are on average incurred by an Uber driver, for example, so they get, effectively, a notional refund paid through their platform supplier of 8.5c of that 15c in the dollar, so you’re left with 6.5c, so the maximum increase in price there could be, but for competition issues, would be 6.5 percent. But even so, many of the competitors of these providers of services are already paying GST, so they’re not going to be putting up their prices, and they will grab market share from—you know, the motels will do a bit better than the Airbnb person if the Airbnb person tried to put up their price in response to this issue. In fact, the distortion that we have currently is the exclusion of those platform services to the likes of Airbnb and Uber that currently avoid GST.

There are some other changes that are made to this bill, including reporting obligations. There has been a call from some people to say that there should be a delay in those reporting rules. I’m advised by the ministry that because other countries are already in accordance with these OECD requests for imposing similar obligations, if New Zealand doesn’t require this, we’ll be creating complexity for New Zealand - based platform operators that, instead of returning this information to the Inland Revenue in New Zealand, would have the more complicated obligation of returning that sort of information in Canada or the United Kingdom, for example.

There have been some other changes recommended by the select committee in terms of some fine changes to the—to the change in the rule. Sorry, I was tongue-tied there. Another change in the bill is to remove fringe benefit tax (FBT) from public transport fares that are reimbursed by an employer. At the moment, you don’t charge FBT on a car park, but you do charge FBT on a bus fare, and that’s obviously distortionary. There have been requests to include the total mobility scheme in the proposed exemption. The select committee recommends that we do that. We think that that’s a good change. We also are confirming that on-demand services are covered by the proposed exemption. These are increasingly offered by public transport providers in areas of lower demand. It’s booked rather than provided on a set timetable, so we’re making those changes too. We’re also making some changes to address concerns about compliance and cash-flow problems for certain cross-border employers in respect of their fringe benefits and employer superannuation contributions. This proposal was intended to clarify who should have those obligations where a person works remotely from New Zealand for a non-resident employer which does not have a presence in New Zealand. To address this, the bill now proposes that the tax obligation should rest with the employer in the first instance, supported by a mutual agreement clause whereby the employee could take on that liability.

These are some of the adjustments and additions to the bill. They are in response to public feedback and consideration of the Finance and Expenditure Committee. Can I thank the committee for their careful consideration of the bill and resulting improvements. I’d also like to thank the policy officials and drafters for bringing the bill to the House for its second reading, and I look forward to hearing the contortions and somersaults that we hear from the Opposition who were about to reverse their position from earlier positions in respect of GST. I find it so hard to accept that they would undermine the core principles of the GST Act and ignore the OECD advice to this country, which over the years I have heard them espouse as being worthy to follow.

The question is that the motion be agreed to.

This bill is just the latest in the Government’s assaults on New Zealanders’ wallets. Here we stand, in a cost of living crisis with inflation at a 32-year high, with prices at the supermarket, at the petrol pump, and rents, mortgages—all going up, up, up. New Zealanders’ real wages declining, their household budgets under strain, and what does the “Minister for KiwiSaver Taxes” get up and do? He does a David Parker—he does a Minister David Parker and tries to explain away why New Zealanders should feed this Government’s addiction to spending with yet another rapacious set of new taxes.

Here, on this side of the House, we say, “Actually, it’s time to give New Zealanders back more of their own money.” You know, the big thing the Minister didn’t talk about in his speech is the rates for income taxation that are set down in this bill, because the real missed opportunity today was the opportunity for the Government to adjust tax brackets for all of the inflation that is occurring in our economy. Because not only are they letting inflation rob New Zealanders’ back pocket once, they’re doing it twice: first, when the prices go up, and, second, by allowing the tax man, allowing the IRD to claw in ever more tax from New Zealanders as they are pushed by inflation into higher tax brackets. But not a word from Minister Parker about that.

Let me set the stage. Tax revenue under Labour: it is up $43 billion a year. Now, that is a number so big that very few can conceptualise it, so let me break it down for you. That number is the equivalent of $17,500 per New Zealand household. That’s how much more tax the Government is taking.

You know, I had this conversation with a woman the other day. She said, “You know, if really what they’d done was they’d ensured that everyone was really well educated, that the waiting times in the emergency rooms were down, that there was more elective surgery, that the environment was being looked after better—hell, if they’d done that hundred thousand KiwiBuild houses—then maybe people would understand why the tax take is so astronomically higher.”

💬 Hon Dr Deborah Russell: Can you table that conversation? Can you table the record of that, or do we just make it up?

But the reality is—Deborah Russell, and you know it—the results and the outcomes for the spending are not there. So New Zealanders have an absolute right to say, “Why do you keep taking more money from me?”

So National says we cannot support a bill that fails, once again, to adjust tax brackets for inflation. We have put forward a detailed proposal, and it would ensure that a New Zealander earning $55,000 a year is $800 a year better off. David Parker will never do that, because, actually, what Labour have shown is that they believe that they can spend New Zealanders’ money better than they can. We saw that, didn’t we? We saw that with the original guise of this bill, which included a brand new tax which I recall David Parker justifying in very similar terms to those that he just used to justify this bill now. Somehow, it was OK for this Government to be wiping literally billions off the KiwiSaver accounts of New Zealanders because they felt the urge for a bit more tax. We’ve still got the Auckland regional fuel tax adding a tax burden to New Zealanders. We’ve still got, according to the passionate speeches from Grant Robertson in question time today, the prospect of a jobs tax that will also tax New Zealanders.

But I want to come now to something else in this bill, and I want to correct the record that David Parker tried to create. Because what he has said is that what he is doing with the “app tax” is somehow completely in line with the way that we have treated GST in this country historically.

💬 Hon Stuart Nash: It absolutely is, Nicola Willis. It absolutely is—as a former Minister of Revenue, it absolutely is.

Shame on him, and shame on you, Minister Nash, for trying to pull the wool over New Zealanders’ eyes, because we know, on both sides of this House—

💬 Hon Stuart Nash: It’s about fairness.

—that a core aspect of the fairness of the GST regime—which I believe in; I believe in fairness—has always been that if you earn under $60,000 for your sale of goods or services, then you are exempt from GST.

💬 Hon Stuart Nash: You can get a rebate back—you get to rebate back. Come on, Nicola. Don’t be dishonest.

So I want to help Mr Nash understand this—he’s confused. I want him to imagine a market, and in this market, there are several sellers, and each of them are selling, maybe, $2,000 worth of goods, $10,000 worth of good there. Overall, that entire market is selling $70,000 worth of goods. Now, what Mr Nash thinks is that means everyone should have to pay GST. We say no. The exact same principle applies to digital apps. Why should it be that the Zoomy driver who has a side-hustle, trying to keep up with the cost of living under this rapacious Government, decides he wants to earn a little bit more on the side—why is it that the members opposite think he should be slapped with a full GST even though he may only be earning $20,000 or $30,000 a year. They’re changing the rules to suit themselves because they are addicted to spending and they want more tax revenue. They are, in the words of the New Zealand Law Society, embarking on “a significant deviation to the orthodox GST treatment of services in New Zealand.” That is what they are doing.

I want them to correct the other bit of the record. We had Minister Parker saying that I was wrong to suggest that this cost would end up being paid by everyday New Zealanders when they get their Delivereasy on a Saturday night, when they catch a Zoomy somewhere, when they get an Airbnb from someone who, by the way, on average, only sells $5,600 worth of Airbnb nights in a year—he said, “Look, none of this is going to get passed onwards to that effect.”

Actually, it’s about time he listened to some of the thousands of officials in his own department, the Inland Revenue. Here is what the Inland Revenue said in the regulatory impact statement for this bill. They said, explicitly, “If GST is required to be collected by digital platforms on these services, … this will be passed on fully to consumers. This will increase the cost to consumers of purchases made through digital platforms by up to 15 percent.” Now, Minister Parker, you would do well to listen to these officials. I would warn New Zealanders that that Minister, who was prepared to stand up today and mislead, I believe, in some ways—pardon me, Madam Speaker—who was prepared to stand up and make claims about this bill which seem to be contradicted by the facts, is the man in charge of revenue in this country.

I’m worried about what comes next because, right now, there’s a little unit down in IRD—it’s the Piketty unit. It’s David Parker’s little hobby project to see what new ways he can dream up to take more tax from New Zealanders.

💬 Hon Dr Deborah Russell: Actually look at what people pay in tax in this country.

Not content with tenant taxes, the removal of interest deductibility that Dr Russell, his Associate Minister, knows was a very bad idea from the minute it was introduced—she knows it. Not content with doing that, and not content with adding to the price of rent for New Zealand tenants, not content with the proposal for a KiwiSaver tax, not content with the idea that a wealth tax may or may not be on the table depending on which Minister is standing up on the day, he is working away on new taxes.

In that sense, I just want to finish on this note from the bill which is pointing to something I find deeply ironic, which is what is called the “Build-to-rent exemption from interest limitation”—as if, for once in their lives, the members opposite think someone shouldn’t have to pay more tax. Well, let’s be clear: it’s not really an exemption, is it, when actually the orthodox tax treatment for all rental properties for many, many decades has been that everyone can deduct their interest. So, actually, that was the status quo, then Labour came in with their rapacious addiction to spending and they said, “We’re going to slap tax on everyone. Who cares if the tenants are paying more rent? Who cares if the emergency housing motels are overflowing in Hawke’s Bay? Who cares if the State house waiting list is four times longer than it ever was under National? We’ll just keep slapping those taxes down. But, don’t worry, there’s a build-to-rent exemption.” [Interruption] Well, if members are so enthusiastic about build-to-rent, I would recommend to them that they pick up our build-to-rent bill which would also exempt build-to-rent housing from the overseas investment restrictions which they are very clear is going to prevent it happening under this particular Labour regime.

So National opposes this bill—it is yet another assault on New Zealanders’ wallets during the cost of living crisis. It fails to reduce income taxes—that is very overdue—it represents a new assault on wallets in the form of the “app tax”, it is an unprincipled bill, a missed opportunity. We oppose.

It was astonishing to listen to those 10 minutes of what can only be described as naive hyperbole from the deputy leader of the National Party—“naive” because it doesn’t understand what is actually going on; “hyperbole” because the words used were absurd and ridiculous. It does make me wonder, though—it does make me wonder—why the Opposition never lets their spokesperson for revenue have the first go at tax Acts. Instead, he gets relegated down the list, not allowed to talk. If I was the spokesperson for revenue over on the Opposition side, I’d be quite upset about that. That might be worth getting hyperbolic about.

Let’s start with the amount of tax revenue under Labour, and this is where the naivety comes through. The deputy leader of the National Party—their finance spokesperson, not their revenue spokesperson—was quite naive in talking about what taxes are coming in to our coffers, to everyone’s coffers, to the country’s coffers during this period, and gave us some raw numbers—raw numbers that were not adjusted for the size of the economy; raw numbers that were just in dollars. But let’s talk about what the tax take actually is in this country, and the fact is that under Labour it’s gone up and down a little bit, but it hovers around about 30, 31 percent of GDP. There has been no particular change in the level of the tax take when you look at it in terms of the percentage of GDP. That’s because under this Government, we have had a thriving economy that is characterised by growth. So we need to move beyond the raw numbers and look at tax as a percentage of GDP.

But where I really want to take this is to talk a little bit about the platform tax, and here, again, the deputy leader of the National Party showed just how naive she is—just how naive she is. The world has changed—the world has changed. Modes of business that existed 20 years ago have changed, and, in particular, we now have new modes of business that are created and enabled by the internet, by the apps on our phones. We have new ways of doing business and the old tax system no longer fits them. We actually need to change our tax system so that it works with the new ways of business instead of just naively pretending we can carry on as we did before, and that is exactly what this work around the taxation of adding GST to platforms is actually doing.

Now, it’s not only that the new ways of doing business have grown, but, in fact, those ways of doing business have themselves changed. Think a little bit about when Uber first arrived in this country, or when Airbnb first arrived. When Airbnb first arrived in this country, it was about from time to time maybe renting out a spare room in your house so that someone else could use it for a weekend in the big city or a weekend in the country. But over time, that has changed. The way that Airbnb operates now is that often it is the whole house that is permanently operated as an Airbnb. It is not simply just one room in a house. It is not simply just an occasional thing; it is an ongoing, regular business.

The same thing with Uber: it was promoted as a ride share, but we know that the way that Uber operates now is an ongoing daily business activity for many, many people. It’s not just an occasional ride share. That was the way it was first set up, but Uber itself has changed, and in response to that we need to change the tax system.

And, in particular, we need to change it because the way the taxation system works at the moment, motel owners are at a disadvantage. Why? Because they have to charge GST, but people who operate through the Airbnb platform do not. The way we have the tax system set up now, people who operate a taxi have to charge GST, but people who operate an Uber do not. We need to find a way to make it fairer. So what we have done is introduce a way of accounting for the taxes on businesses that operate through a platform like Airbnb, like Uber. Those platforms will now charge 15 percent GST, collect the GST, pay it over.

And it does make a difference. So here’s the difference that goes on with respect to some people who are GST-registered, if a business is already GST-registered. Now, let’s remember: any business can be GST-registered as long as they are carrying on a continuous or regular service providing goods and services for consideration to another person—that’s the way we determine whether someone can be registered for GST. Any business can register for GST if they meet those criteria. Businesses who have a turnover over $60,000 must register for GST—they must register for GST, and it’s an important thing. So if those businesses who are operating through the Airbnb platform, who are operating through Uber, are already GST-registered, they are already charging GST, they’re set up for it, they can work with the platform and the platform doesn’t charge GST on the services that that GST-registered business provides.

If, however, a business is not GST-registered, then in order to ensure that Airbnbs, that Ubers, that other businesses like that operate in the same mode and are subject to the same conditions as other businesses—like motels, like taxis—from now on, the platform will collect 15 percent GST on top of the services.

But here’s something that the Leader of the Opposition—sorry, the deputy leader; it gets hard to tell which is which sometimes—got wrong: she said a Zoomy driver will be hit with the full 15 percent GST. That is simply not the case, and I direct the members of the Opposition opposite, just over there—I direct the deputy leader of the National Party, I direct whichever ACT Party member is going to speak on this—to page 75. And, in particular, I direct you to section 20(3N) of clause 116, and that tells you something quite special: that in recognition of the costs that the supplier bears, on which they pay GST, they get 8.5c of every 15c of GST back. It functions exactly the way that a GST-registered person can get a credit for the GST input tax they pay—it functions exactly that way. So they get 57 percent of every bit of GST charged back. They get it back, and I direct your attention to that clause because it’s very important. So, like anyone who is GST-registered, they get a credit for the input taxes they have paid. It’s a really straightforward—it’s sitting in there.

And if you ask why 8.5c, it’s because when IRD looked at the numbers, looked at what GST-registered businesses were paying, what GST they were collecting, what they were claiming back, it turned out to be about 8.5c of every 15c of GST they were claiming back in input tax deductions. So the Zoomy driver does not get the full impact of the GST—get it right. That’s all I can say, is “Get it right”.

I think, sadly, I’m running out of time. So I just want to end on a simple point: what we had from the deputy leader of the National Party was scaremongering on taxation. The tired, familiar old mantra from the Opposition, which goes “Taxes bad. Taxes bad.”

Let me talk of some of the good things that taxes pay for. Taxes pay for education. Taxes pay for health. Taxes pay for welfare. Taxes pay for the roads we drive on. Taxes pay for the judges and for the legal system. Taxes pay for so many of the good things that we provide to our community because that way we are all better off. It’s a simple thought: taxation is the price of civilisation, and all of us ought to be glad to pay our taxes because that is what we do to create a civilised society and to create a society in which every person is cherished. I commend this bill to the House. [Interruption]

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Are we done? Are we done?

Thank you—I was waiting for my turn. It is a pleasure to be talking on this Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2), second reading.

Well, there you have it. There you have it. What do you use taxes for? Well yes, you do use them for health and education—that’s right. But you also use them for the consultants to advise you on a broadcasting merger, three waters disaster—what else are we going to talk about? Even today, we had the New Zealand Productivity Commission before the Finance and Expenditure Committee. Small entity, $5 million turnover, and guess what? They spent $883,000—nearly one-fifth of their budget—on consultants. This is the party, and now we’ve got organisations just addicted to this type of stuff.

So that comment about “Is it great to tax?”, yes, it is great to tax for the right reasons. But the reason is you’ve got to have a meaningful purpose and you don’t waste other people’s money. Unfortunately, we’ve got a Government that never regards other people’s money as something you shouldn’t waste; they think about inventing new ways of spending it, and that’s what we’ve seen.

But I’m so glad I had to sit and listen to Dr Deborah Russell, because I always enjoy her lectures.

💬 Hon Stuart Nash: Did you learn something?

I did, Mr Nash. A thought did cross my mind about her students. I now realise how students benefit from her lofty ideals and good, thought-through elucidation of the tax system—I thought it was intriguing. I loved the line about the deputy leader of the National Party using raw numbers. Of course, we’re starting to talk about proportionality.

Of course, we had a Minister of Education today talking about proportionality. Now, I’m not bad with numbers—I’m not fantastic, but I’m not bad—but even I was struggling to understand what the dickens she was talking about. And here we are, we’ve got Dr Deborah Russell talking about—

ASSISTANT SPEAKER (Hon Jacqui Dean): You know, if the member wouldn’t mind—getting slightly carried away. The member will come back to the bill, please. Passing reference to some other matter, yes. But back to the bill. Thank you.

Thank you. So the raw data she thought was pretty unsophisticated. Well actually, from my recollection, the $43 billion that my good colleague Nicola Willis referred to came out of the Budget documents. So I actually think it’s not a bad source, Mr David Parker. I’m sure you’d even agree with that.

But the issue is $43 billion of additional spending—per annum, by the way; that’s the increase: it’s not over the period, the increase now is $43 billion this year—the impact of that $17,500 per family. New Zealand families, on average, are sending $17,500 more to the Government in terms of paying more tax.

And I just had a thought: “I wonder what I could do with $17,500?” So I’ve just been looking here and I thought about, “What would Mr Nash want to do with $17,500?” So I thought, “Well, maybe I’ll have a look at cars.” So the first car I looked at, I thought, “Maybe Mr Nash would go for a sporty coupe type.” I thought, “What could you buy for $17,500?” I reckon Mr Nash would look really smart, with his wife, in a 2019 Ford Focus—that’s the one that James Bond used to drive. And I thought, “How would you feel about 71,000 on the clock? That’s not a bad little number.” It’s not a bad offering—if I had $17,500 and was a family, actually I wouldn’t go amiss with that.

💬 Hon Michael Woodhouse: Actually, he wouldn’t be seen dead in a Ford Focus.

Oh yeah, well then I thought, “He might be a bit more conservative.” So I thought, “What would he do if he bought a sedan?” So what about, Mr Nash, a 2014 Honda hybrid—and it says, “Very, very good condition.” I’ve just got to get the name here—oh yeah, 2014 Honda Grace hybrid. And I thought that would be very good.

So when Dr Deborah Russell is saying, “It’s ordinary facts and don’t worry about it; we’ve all got to pay our fair share of tax.” The implication for New Zealand families is that they’re now paying the Government $17,500 more than what they ought to have, and what they would have, and what they will have if they elect National in the next coming election, because we are going to reverse the thresholds and, of course, this bill does no such thing.

On those grounds alone, we oppose this bill. Because we want to make sure New Zealanders are better off, and when you think about our tax proposals—to take everyone’s tax bill; what they might have been paying back in 2017 when this Labour Government came to power and what they’re paying today: that is worth about $1,700 per family. Of course, following Christopher Luxon’s great announcement over the weekend about the early education rebate—it’s $75 a week, that’s $3,900. That’s $5,500 that a family in New Zealand with children will be better off, and that’s why this bill is wrong—because it’s enshrining this avalanche of new taxes.

Now, talking about avalanches of new taxes: of course, we’ve been talking about the “app tax”. It’s a bit of a worry, this, because the context—contrary to what Dr Deborah Russell was talking about—is that this is a very new proposal. Basically, it’s only come in in about four or five jurisdictions, and whilst the EU is also looking at it—that is true to say—New Zealand is at the forefront of bringing in this new piece of legislation. One of the things we kept asking officials is “Why do we have to be at the forefront? Why does New Zealand have to be at the forefront?”

💬 Anna Lorck: Why not?

There we are, it’s a new piece of legislation, and of course one of the quick reasons we shouldn’t be at the forefront—just responding to Anna Lorck’s question—is that a number of the operators will have problems complying with this requirement. Because little old New Zealand doesn’t actually rank highly in terms of all their systems and changes they’re going to have to look at around the world. Contrary to what many people in the Labour Party think, little old New Zealand’s probably 0.1 percent of their turnover, and therefore the requirement to do this—but also the rules are very new. And the OECD has been working on this for quite some time, and they’ve only basically come to some conclusions around it. And yet this Government has chosen to just jump ahead with this proposal.

And there is some caution about that; there is some caution why we need to be at the forefront because IRD has certain priorities and I know that Mr David Parker, the revenue Minister, has had them going down blind alleyways to do stuff around their tax policy for the next election cycle around trusts, etc. But, actually, we want the IRD to be focusing on good stuff: compliance, hidden economy, actually making sure that New Zealanders are paying their fair share of tax. But no, what we’ve ended up has been diverted into this “app tax”. And there are real risks around this, and of course what my good colleague the Hon Michael Woodhouse continuously tried to point out to Dr Deborah Russell was that there is a rule that you do not have to pay GST below the threshold of $60,000—

💬 Hon Michael Woodhouse: Don’t have to return.

Don’t have to return. Now, commonly we heard quotes about taxi drivers. Actually, when I rang the New Zealand Taxi Federation, in the main they all earn more than $60,000 so they have to pay GST. The average value on Airbnb, which we heard, is $5,600. So this is a tax that’s going to chase people who want to go away for a holiday in January, February, or Easter coming up, or whatever it might be, and they will now have to pay more for their bach or for Uber or whatever they want to do—because of the introduction of this. And it will be a serious increase in the cost; even the officials said that it’d likely lead to a 15 percent increase.

💬 Hon David Parker: No, they didn’t.

I know there’s an argument about the “net off”. I understand that, but the officials said that, and that is what it will ultimately mean for New Zealand families going away—once this comes into play next year, Mr Parker, that they will be paying more for that bach than they would have this year, and that is a problem in a cost of living crisis in New Zealand largely made up of the Labour Government’s proliferate spending habits.

Thank you, Madam Speaker, for the opportunity to speak on the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2).

I’m a new member of the Finance and Expenditure Committee, and I want to acknowledge the previous committee members the Hon Barbara Edmonds, Glen Bennett, and Helen White, who were all involved in hearing the submissions on this bill. There were 813 submissions and 24 oral submissions. There was, of course, advice from Inland Revenue and the Regulations Review Committee—great committee, which I may have been on at that time. We had an independent reviewer as well, who was very helpful for what is a very technical bill that changes a lot of different pieces of legislation. Of course, we also had the Office of the Clerk and, as always, the Parliamentary Counsel Office. So I want to thank them for their work. As you will have noted from the speeches tonight, it’s a very engaged select committee.

There have been many amendments to this bill, but not to the annual rates and income tax. So the amendments are to the tax settings. As I mentioned before, the bill is omnibus with amendments to eight different Acts, five of which have “tax” somewhere in their title, but one of them is the Residential Tenancies Act 1986, and I want to get to that change.

And that is, one of the changes in this is about the build-to-rent exemption from interest limitation. The interest limitation rules prevent property investors from writing off mortgage interest as an expense when paying tax, but there were exemptions when this law came into effect from 2021. There are exemptions for new buildings for 20 years when the owner lives in them. So the logic behind this exemption is to incentivise new buildings. We need more dwellings in New Zealand, so that’s a good thing. But it is linked to ownership, so that doesn’t really work for rentals. So this bill provides an exemption for build-to-rent dwellings that meet an asset class definition, and it goes in perpetuity. So the bill as introduced required, via the definition of build-to-rent land, 20 dwellings on contiguous land. This requirement for the land to be contiguous was considered via submissions, and the select committee has removed that requirement for that land to be contiguous.

There were further small changes from the select committee around this enabling of the build-to-rent exemption. One of those changes is at clause 183(2B), inserting new clause 39C, and that enables the commissioner to share taxpayer information with the Ministry of Housing and Urban Development. The submitters also raised an inconsistency with the Residential Tenancies Act definition of “fixed-term tenancy” not including a tenancy that is terminated by notice. The inconsistency here is that the build-to-rent definition that’s in this bill does allow for a 56-day notice by tenants. So there is now, in this legislation, an amendment to the Residential Tenancies Act to incorporate this build-to-rent definition. Scope issues around that did go to the Business Committee.

This bill overall produces a more coherent and fair tax system and it includes encouragement as well as wanting to provide more houses and having the exception on the build-to-rent—houses for people to rent in long-term secure tenancies, that is. Also, there’s the changes to the fringe benefit tax that the Minister touched on, as well, that will allow other modes of transport other than vehicles—so public transport—to get that. And also the changes that the select committee made extend that to a total mobility scheme. So I’m proud to commend this bill to the House.

Tēnā koe, Madam Speaker. The Green Party supports most of this bill, the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2).

I just want to talk about one area where I think there’s still a huge opportunity to get a much better outcome from this bill. I’d like to really focus on that particular aspect of the bill in this speech. One of the reasons it’s a major focus is because we actually received a huge number of submissions on this at the Finance and Expenditure Committee—over 400 submissions. Some of these were from regional councils, regional councillors, people who are working in businesses, and even some tax specialists, but literally hundreds of people wrote in submissions, asking that fringe benefit tax also be exempted from other vehicles like bicycles, e-bikes, scooters, e-scooters, and sharing services that might be used for commuting purposes. Currently, the bill does not do that. The bill does exempt public transport passes from fringe benefit tax, which is a welcome change that starts to reduce the distortion to travel choice that currently exists in our fringe benefit tax system, but it doesn’t go all the way. This is a simple change that the Government could make that would make it easier for employers to provide support and incentives for sustainable commuting modes that, right now, currently, fringe benefit tax is a barrier to.

Before I even came to this House, I worked as a transport planner and I worked for an engineering consultancy that was then Sinclair Knight Merz, and it was later acquired by Jacobs. One of my first jobs when I was still a student planner there was to chair the internal environmental committee. What we were trying to do was do everything we could within the business to make our business more sustainable. One of the key things that was driving pollution and congestion was the way that people got to work. But what we found quite quickly—and this was back in 2007 and 2008—was that, as an employer, if they were to try and take steps to incentivise people to bike to work or to take public transport, it was a problem because they would have to pay fringe benefit tax on these incentives. Of course, that created huge distortion because there is no fringe benefit tax charged on employer-provided carparks, which are often worth as much as an annual public transport pass, and a good deal more than a push bike, probably about the same amount as a reasonably priced e-bike. So there is this distortion in the system.

The New Zealand Transport Agency published a research report back in 2012 that actually analysed and went into quite a bit of detail about how the fringe benefit tax system was unintentionally subsidising car trips for commuting to work. That creates congestion because, of course, what is the main driver of peak congestion? It’s the trip to school and the trip to work combined, basically. So here we are, trying to deal with high levels of congestion at some certain times of day. That’s a public cost that we have to deal with infrastructure and services to try and combat that. There’s more pollution and greenhouse gas emissions from cars at the moment. And there’s just all sorts of health benefits and wider public benefits from people being able to get to work by public transport or by bike. But the system is currently unfair as it’s set up.

The problems with our high reliance on private cars for travel to work have been noted in the two most recent OECD reviews of New Zealand that I looked up. The one in 2017, an environmental review, identified transport as an area where New Zealand is lagging behind and needs to do more to achieve “coherent pricing of externalities”. They particularly noted investment and support to increase low-carbon travel by public and active transport—cycling, scooting, etc.—was recommended. Similarly, in the most recent 2022 OECD economic survey, they identified that environmental taxation can be used to reduce externalities related to road transport.

Now, the problem with the advice that we get from the IRD is that—you know, they’re always like, “Oh, but we just need this pure, simple tax system that is as simple and transparent as possible.” It’s basically their religion. I mean, I’d like to know what happens when someone gets hired by the IRD. They must be, like, sat in a room with this sort of drilled into them because they repeat it at just like such a deep level—they really believe it. The simplicity of our tax system; we’re the envy of the whole world. I tell you what, we’re really not, because if you look at the OECD economic survey, it says that we’re really lagging behind because we’re not using our tax system to get better environmental outcomes. You just can’t reconcile why IRD is saying—with that recommendation from the OECD, the world’s most preeminent body on economic research and analysis, of which New Zealand is a member. So you can tell I find it a little bit frustrating when I hear that line, because it has to be taken as an article of faith that you believe a simple tax system is more important than one that gets better outcomes that the public wants.

I personally hold that we should use our tax system in ways to get to the outcomes that we want as a public. This would be a very simple change that would cost New Zealand nothing, that would enable those employers who want to—and those employees who want to—benefit from incentivising bikes, e-bikes, e-scooters, and possibly e-scooter sharing services for a commute to work. There’d be huge benefits in our town centres. One thing that I think the committee really missed out on is that not everyone can take public transport. You know, public transport doesn’t exist as a viable means of commute in many parts of New Zealand. So we haven’t really rectified the current distortion simply by exempting public transport passes from fringe benefit tax. Extending it to e-bikes, scooters, and sharing schemes that are primarily used for commuting purposes would enable that choice to available for people who don’t have public transport services, or those who, unfortunately, live in places like Wellington and Auckland, where, in theory, there are public transport services, but the buses are regularly cancelled. So it’s not very reliable at the moment.

Just a few more things I’ll say about this, which is that the United Kingdom has an incredibly successful scheme like this called the cycle to work scheme. The studies have shown that they have had huge uptake—you know, the benefits massively outweigh the cost, there are over a million users that have used it, a 91 percent increase in bike journeys over 10 years. Canada and many other countries have similar sorts of tax breaks for sustainable transport, and that includes cycling. At the moment, with the popularity in e-bikes, this would be a simple move the Government could take that would enable support for e-bikes, to make it a little more accessible for people because there is a high upfront cost to them that can put people off. But, in fact, it would help with cost of living for those people because it would mean they wouldn’t have to pay for petrol, they wouldn’t have to pay for parking, not to mention that we have these enormous public health benefits which benefit our whole health system because people who bike to work or walk to work are much less likely to get cancer and be hospitalised for a whole range of reasons—it adds to their quality of life.

Now, I know people in this House think this is a weird fringe issue, but I really would ask members in the House to consider supporting my Supplementary Order Paper (SOP), which I will be putting forward in the committee stages, to extend this exemption to e-bikes and bikes, as over 400 submitters called for at the select committee. I would think that it would be something that all parties could agree on, since the ACT Party and the National Party are complaining the Government has too many taxes and too much red tape. Here’s a perfect example of a tax and red tape that we could get rid of, which would help support better outcomes for the climate. I know the National Party does not have any proposals to do anything about climate change. Maybe they would consider a tax break for sustainable transport as something they could consider. I definitely think the Labour Party should consider it because the Labour Party is, at the moment, the Labour Government, and is actually doing nothing to support sustainable transport while they’re spending over $1 billion subsidising cost of fuels, unfortunately, in the name of cost of living. It’s a short-term measure to cut petrol tax; it’s a long-term measure to allow people the incentive of getting an e-bike, which then saves them having to rely on petrol for many, many years.

So that’s the opportunity we have before us, members. Please support my SOP at committee stages.

Thank you. To my colleague Julie Anne Genter, that is a good phrase that “the Labour Party’s doing nothing.” So that should stir the loins of everybody up. The actual remedial bill has three main purposes. First, it seeks to improve the current tax settings by ensuring that current tax rules are working as intended. The bill, though, also seeks to modernise the current tax settings regarding Inland Revenue’s administration of GST, KiwiSaver and social policy rules. Finally, the bill would set the annual rates from income tax for the 2022/23 tax year and has to be passed by the end of March or no income tax can be collected.

So we oppose this bill in its entirety. The bill still roots us back in the lower quartile of the OECD with regards to tax on a per capita, per GDP basis, and you can still see and feel the sucking sound of money being taken from hard-working people in New Zealand and deposited in the Treasury vaults or at the IRD. So, you know, this bill is a classic fix up job. It hasn’t allowed for adequate consultation. There’s some poor policy decisions in here. ACT will be very strong in its future negotiations in Government with regards to the interest deductibility change; the brightline test being abolished, even though our partners in National can’t see that as being something they’d even bother writing about in the alternative opinion to this bill. We trust that the distortions that this tax bill has caused to the mums’ and dads’ property market has been devastating throughout New Zealand, and for anybody who is trying to get on in this country, you can see that taxation is more important than revenue and the country only works if it’s got revenue.

So we see this as a regressive tax package; it doesn’t drive productivity or growth. It continues to place our country in a place where a young person would want to get on a plane to Australia and make a better living. The tax bill also contains a proposal to give build-to-rent dwellings an exemption from the interest limitation rules for residential property, introduced in October 2021. The intent of this proposed exemption is to ensure that the interest rate limitation rules do not disincentivise investment in build-to-rent properties. Owners’ intentions are paramount to a stable housing market around long-term tenancy and new stock. So ACT will be lodging a Supplementary Order Paper, under the name of Brooke van Velden, to the committee of the whole House to adjust all amendments made in the bill which exempt build-to-rent residential properties from interest deductible limitations to all residential properties from interest deductibility limitations.

I’d also like to point out to our National colleagues that the Labour Party, technically, has presented an argument tonight around the GST collection on apps. Technically it’s sound, however it’s bad timing; it’s not going to come into law unless the Labour Party win the election, which is up for grabs and not likely, and it really means that people now have to make hundreds of thousands or million-dollar investments in platforms that they don’t even know whether they’ll be using come Christmas-time this year. Classically, we’re bowing to the OECD and we’re bowing to external forces to run our country on a GST basis.

So you’ve seen it from the National Party—let’s reverse this—but, you know, people are asking me, sitting in taxis at Wellington Airport and Auckland Airport, “Are the National Party in the back pocket of big American companies? Do they want to give preferential terms and rates to Airbnb or Uber?” Because a lot of local business people who drive a taxi or run accommodation are getting crucified. I’ve had emails today from mums and dads—Vanessa and Nigel, who own a bed and breakfast in Napier, who are absolutely passionate about trying to get to the bottom of this. And this is where the problem is: there’s a rule for the big people and then there’s a rule that can’t be applied for the small mum and dad operators in this country, and we’ve got to get real that New Zealand—that’s how people make a living, locally. They are worried about the impact on international tourism. They don’t know what apps are. They don’t know how they apply these things but the big companies do. So I would argue that the National Party needs to go back and think this through because, ironically, in 2016, they supported the charging of GST on Netflix, which—

💬 Hon Michael Woodhouse: Yeah, Netflix is a billion-dollar company.

So is Uber and so is Airbnb. And so the big American companies are competing with our local businesses, Mr Woodhouse. So I’m just making the point of, historically, that was the policy platform that you guys had sorted out. So to call it an unfair tax on the people of New Zealand—it’s a GST tax. People are asking me, if they’ve got their own businesses, “Oh, that’s good. Can the National Party give us our GST back and then come and buy our services as well?” So, you know, there’s a bit of confusion there on the other side of the House, and it’s not just about apps and your food coming on a Saturday night, which we all enjoy, of course. But, you know, the committee needs to actually think about—in a cost of living crisis, this is just a bad look, in terms of charging services. But there has to be a level playing field, and that is the argument that the Labour Party are purporting to get across to the House.

The new set of rules around sole business traders under a $60,000 threshold don’t have to charge GST on their services—the figure is correct; it’s about 8 percent, which will actually be the impact. So I don’t know if the spokesman for revenue for the National Party has looked at that, but, in terms of the red tape, it seems Uber will be required to hand back 8.5c of each 15c of GST they collect to host, and drivers, as a proxy for GST, would normally reclaim their costs if they were registered for GST. So that arrangement is relatively generous; that means that the Inland Revenue will only get 6.5 percent of each dollar spent on stays and rides by the ways of the sales tax.

So I just wanted to clear that up because there is some political uncertainty around that situation, and before we plough ahead and start building systems to comply, it would be good if Mr Parker could maybe differentiate between what is really mum and dad businesses and operators versus corporations and internet-based models. Because you can have an app-based platform if it is a purely internet-driven business, but if it’s a mum and dad operator who relies on a phone call or an email or a booking, that’s very difficult, and there should be some further differentiation in that system.

So we don’t want to be hostage to big American businesses. We want New Zealand locals to have a real input into this issue, and because of the nature of the introduction of the app platform after the election, maybe it’s something we should park and have another look at and get a cross-party support that helps people who want to earn some revenue to actually be sympathetically treated and not just corporatised or OECD-ised, but let’s put New Zealand first for a change and let’s get some sense back into this tax bill.

So next year, we hope to see a more progressive tax platform. We hope to see, from the ACT Party, people getting $2,200 in their back pocket and let them make their own decisions with regards to how they spend their revenue and to reduce the size of Government spending to allow them to make their decisions. They’re sitting at home tonight working through their books, cutting their cloth accordingly, and why shouldn’t Wellington, and this bureaucracy, be doing exactly the same thing in the backrooms of the Treasury. The Treasury still hasn’t reported back yet on the cyclone effect and the moneys that are needed for that, and we believe the Government has to find savings, and not just tax the future of our children and grandchildren or the existing people today. At the ACT Party, we’ve identified $9 billion worth of savings that can be easily achieved, and this tax bill should reflect this in the future. Thank you, Madam Speaker.

I’d like to acknowledge the previous member, Damien Smith, for what, at times, was a helpful contribution, in terms of explaining with some clarity, at times, what this tax on Airbnb actually does. I’d really like to address my comments tonight to those families that do run Airbnb businesses to reassure them that a lot of what has been said in the House tonight hasn’t made a lot of sense, but that this is primarily about fairness—I know that most New Zealanders are really preoccupied with fairness and don’t mind paying their fair share—and actually that the impact of this tax will be nominal. It’s not actually them who is being taxed, it’s the platform—and I’ll get into that.

But also, I’d like to just look at whether the National Party, the Opposition, actually don’t understand the tax, which could be concluded from the comments tonight, or whether they are really trying to gain some political mileage out of something. I suspect it’s the latter, because there’s quite a track record of members across the House who’ve spoken tonight who have supported this particular tax but also supported what’s being called the “Netflix tax”, which operates on the same principle. You can’t have it both ways. The fairness is basically around distortion: either the market is distorted now or the market will be distorted if we bring this tax in. It’s very clear that the market is currently distorted, and what we are doing is recalibrating it to ensure that there is fairness in the market.

I’ll give you an example. It’s not fair that somebody who prepares a meal in a restaurant is charged GST on that, but the Uber driver who goes to deliver it is not charged GST. That is simply not fair. What we are trying to do is close a loophole that has come about because the world has changed, technology has changed, and there are ways of doing business now involving multinationals, involving local suppliers, that didn’t exist when GST first came in.

So the distortion is currently in the market, and I thank Damien Smith for pointing out some of the conversations he’s had with hospitality providers, with taxi drivers, who’ve said, “How come we have to pay GST and Uber don’t?” That is very much the case, and that is why Hospitality New Zealand has supported this bill.

In terms of the impact, it is a nominal impact, and that is because, let’s remember, not all Airbnb providers earn less than $60,000; there are many motels, many professionalised members of the tourism sector who are using these platforms who are currently not passing on the GST to the Government. All of these providers are called “underlying suppliers”. They continue to be zero-rated. So the equity in the tax system remains intact, it has integrity; the GST applies to the platform provider. These are the multinationals, these are the ones that Damien Smith spoke about, who have been taking revenue out of New Zealand, who are not paying their fair share currently. This is simply not fair to small businesses in New Zealand who are trying to compete with those international providers. They need to pay that GST and, as often happens with these laws, the net is either cast slightly too wide or slightly too narrowly, and then there has to be some compensation to try and calibrate it. The way that has been achieved with this legislation is to say that, for those earning under $60,000, the GST will continue to apply to the platform provider, and they will get the 8.5 percent rebate. That is how this works.

So it’s a small number of operators. I understand that they might feel concerned. There’s been a lot of information and misinformation and a little bit of hysteria about what this tax involves, but I can assure them that the distortion in the market is now, and what this tax is aiming to do is to create a level playing field. I think all New Zealanders want a level playing field, not only because it is fair, but because that is what makes our tax system robust, it’s what makes our economy robust, it’s what contributes to economic stability.

Then when I look at the National Party’s track record on tax there has been, of course—one policy, which I think they no longer subscribe to, which was around tax cuts for the rich. I’m glad to see that’s off the table—the same policy that was going to give a $2 a week tax break for the lowest-income workers. But the flip-flop they are doing now, I believe, is really a cheap political ploy. I know that the members opposite are far more astute than that. Nicola Willis on 21 September 2022 said, and I quote, “It’s about fairness, ensuring that motels are treated the same as Airbnb, and that Ubers are treated the same as taxis.” She went on to say, and I quote, “In the case of tax for Super, the status quo has been working for more than 15 years. In the case of Airbnb and Uber, these are new developments.” And yes, they are. That is why we have these new categories of suppliers that we need to take into account.

The Hon Michael Woodhouse, a quote from Hansard, 31 March 2016: “A strength of the New Zealand tax system is the fact that taxes are applied fairly and evenly, and there are very few exceptions.” He goes on, another time in Hansard, 3 May 2016: “The strength of our GST rules is that the tax is applied equally and with very few exceptions. This helps to ensure that the tax is fair, efficient, and simple.” And there are also quotations from the Hon Todd McClay and others. So it’s tempting to think that the members opposite don’t understand tax. I can understand why my colleague the Hon Deborah Russell might say so, herself being a tax expert; I’m sure she probably thinks that of many of us in the House. I give them more credit than that. I think that this is a cheap political ploy. They like to call it the “app tax”; it’s got a ring to it. They know as well as we do that this a fair tax that is correcting a market distortion and that this is going to serve small New Zealand businesses and make the big multinationals pay the GST that they should be. And so, I commend this bill to the House.

The next call is a split call. I call on Sam Uffindell for five minutes.

Thank you, Madam Speaker. I rise to oppose the annual rates taxation bill, because I think this is a real missed opportunity. Now, we think Labour—on this side of the House, we can see that this Government is addicted to spending. My colleague Nicola Willis pointed out, quite rightly, that under this Government tax revenue has leapt up $43 billion in five years, and that is a staggering amount of money. To put it in a scale that we could probably better understand, that is $17,500 per household—a considerable amount of money, and we do this at a time when we’re in a cost of living crisis.

On this side of the House, we believe that New Zealanders should keep more of their hard-earned money because they are under intense pressure, and there was a real opportunity here to help address that. We’ve been saying that Kiwis deserve to keep more of their money, and this bill ignores the impact of inflation. What could’ve been done is what National has been proposing, to adjust income tax brackets. Now, that might not put a huge amount of money back in your pocket, but it is going to make a difference. So, for your average household out there, you’ve got mum and dad, or both parents, or both people, working, earning $120k a year. They would receive, under National’s income adjustment tax brackets, $1,700 more a year. If you add that on to our childcare policy that came out on Saturday—an excellent policy, I might say—that would or could deliver up to $3,900 a year, and that would give households $5,600 more a year, which is enormous when you consider that, under this Government, they are being taxed $17,500 more per household.

We have a Government over the other side of the House that is addicted to spending, and they’ve tried to sneak in an “app tax” here. They tried to put in a tax on your KiwiSaver, and I’m glad, thankful, that that has been walked back—somewhat humiliatingly walked back, but walking it back was the right solution. We had ute taxes, we had petrol taxes—the Auckland regional fuel tax is still in effect—taxes on your wages, and now they’re coming after your Ubers. I heard the comments from the member who spoke before me, Ingrid Leary—we know what this is going to do, and the advice given to the Minister is that this is going to be passed on to the consumer. We are already in a significantly inflationary environment, and this is only going to add further fuel to the fire. You know this—you know this. I know you know this, because your own officials have told you this.

We want to do things to make it a little bit easier for struggling Kiwis to meet the rapidly rising cost of living, but this is a further tax grab by the Government, and they’ve got more lined up as well—we know they do. We know the “jobs tax” has been parked, but if we are all unfortunate enough for you to win the next election, then it will be coming straight back in. We know it’ll be coming in hard.

We’ve got interest deductibility taxes—that didn’t help anyone. What’d that do? The same thing the officials told you it would do: it pushed up rents. That had a significant impact on people, and it’s probably one of the reasons why we have a significant increase in homelessness under your Government.

Now, let’s look at equity, because we’ve heard it mentioned. We want this to be an equitable system, and we already have an arrangement in place where, if you earn over $60,000 as a provider of goods or services, you will pay GST. Now, what this “app tax” does is it completely circumnavigates it and it applies it, as my colleague Nicola Willis said earlier, to anyone, no matter what they earn in that space. The New Zealand Law Society described these changes as representing “a significant deviation to the orthodox GST treatment of services supplied in New Zealand.” So if you want to talk about equity, then we can do that, but this isn’t an equitable tax. This bill is a missed opportunity, and we could so much better. I oppose this bill.

Thank you, Madam Speaker. I appreciate the opportunity to take an unexpected call on this bill tonight.

Look, there is a saying that goes “It’s important to be on the right side of history.” It’s important to look forward and say “Is this the right thing to do?” As a Government, we believe it is the right thing to do in terms of fairness. I’m disappointed to see the Opposition are opposing this bill.

💬 Nicola Grigg: You’re leaving cos you saw the poll.

Now, I’m sure that members, including the member opposite who’s being very vocal there—I’m sure that members have spent time in a taxi, often leaving Parliament on the way to the airport, and they’ve had a conversation similar to this. The conversation goes: “Back in 2016, the previous National Government, the Hon Simon Bridges, Minister of Transport, he allowed Uber to have free rein.” It sort of goes something like that. And then the taxi driver then goes on to say, “Look, you see, Uber don’t have to have these sort of regulations. They don’t have to have this, they don’t have to have that. They don’t pay tax.” Now, this conversation has come up many times and it’s always ended in the same way.

I think, deep down, the National Party regret giving Uber free rein back when they brought that in. I see the member Michael Woodhouse smiling, but I think deep down they know that they made a mistake. I believe they’re about to make a mistake again. It’s still not too late. It’s still not too late to quickly text Christopher Luxon and say, “Look, can we change our mind on this? We’re on the wrong side of history.” Maybe that’s for them to think about, but we are a Government who believe in fairness in the tax system. There is no doubt that there is a gap here in policy and we’re filling it. I commend this bill to the House.

Thank you. I just cannot trust the National Party on tax—I can’t—because when the National Party were pitching up that they were going to do tax cuts, when they were going to come in and win an election, and they said that they would cut tax—they came in, and guess what they did! What did they do? They increased GST. They said they weren’t going to, but they did. They increased GST to 15 percent.

They love tax. The National Government loved tax. They like to tax and tax and tax. They do tax, everything they say about trying to think—or any New Zealander who seems to want to believe that the National Government won’t tax you, the National Government will tax. Then they try and say that they are going to drop taxes, but they will drop taxes on the rich. Mark my words—mark my words—it will be tax, tax, tax by the National Government if they ever get in, because they want to make income, as well. Don’t sit across there and say that you don’t like to tax, because the National Government did tax. They said they weren’t going to increase GST, and, oh yes, they did; they put it up 2.5 percent—15 percent.

And they have the gall to turn around and think that they can take this “app tax” and not mention, not once, that there is a rebate—a rebate for those who are not registered for GST, who may b. & b. their family home or their bach. So it’s all talk from the National Party—it’s all talk because they seem to think that the people of New Zealand will believe them. But you cannot trust them. You cannot trust National ever when it comes to tax, because they are on the record, they said they wouldn’t increase tax, and lo and behold, the moment they got into Government that is exactly what they did.

ASSISTANT SPEAKER (Hon Jenny Salesa): Order! Order! Would the member come back to this bill. Thank you.

Yes, Madam Speaker. Well, we’re talking about tax, and I like talking about tax. I just want to say that when it comes to GST and the proportion of GST that should be paid by those overseas businesses that have apps and make money out of New Zealanders, they should contribute to the tax system.

But as I finish my speech, I just need to reiterate that you can’t say one thing and then do the other. When it comes to tax, the National Government loves it. I commend this bill to the House.

Thank you, Madam Speaker. Well, the one really good thing about following Anna Lorck is that you could deliver the worst speech in 15 years and still sound better than that. It truly was the ramblings of a confused and tired member. As I say, it’s OK, Anna Lorck, you’ve only got seven months to go.

Now, I must say, when the Minister in his second reading speech referred to my time as the Minister of Revenue, I was having something of a flashback to meetings with IRD officials in the office of the Minister of Finance because he wanted to keep a weather eye on tax policy. So I as revenue Minister, and Bill English as finance Minister, would meet with tax officials and their policy people—of whom I have a very high regard, I must preface this story by saying—whom, every once and a while, would come up with a pretty wacky tax policy, to which Sir Bill would say, “Well, there’s a very good reason to cut the policy budget for the Inland Revenue Department.” The problem with the current Minister is that he’s never seen a bad idea on tax.

It’s interesting to reflect on the former Prime Minister Jacinda Ardern’s commitment to the country that there’d be no new taxes in this term of Government—and, of course, Prime Minister Hipkins has reiterated this. What I think they really meant to say was we’re not going to invent a new tax category but we’re going to squeeze the hell out of the ones we’ve already got. The really sad thing about this tax is that it is really squeezing the stone.

Now, the Minister quoted—as did Ingrid Leary—comments that I made as Minister in 2016, and Todd McClay as well, when we were Ministers trying to actually create a framework for a modern economy. Both of them are sort of suggesting that my comments then were inconsistent with the National Party position now, and nothing could be further from the truth. What’s really inconsistent—and I would encourage Ingrid Leary to think more carefully about this—is to compare a multibillion-dollar company like Netflix with a University of Otago student that wants to make a little bit of money on the side part-time by delivering Uber Eats or the family in Mosgiel when Pink comes to the Forsyth Barr Stadium in 2024 who may be renting out their property through Airbnb to make a few dollars on the side. That’s the inconsistency.

Actually, if one reads the GST Act—and this is really sad because it was a Labour Government that brought the GST Act in in 1986, and they did it then—

💬 Andrew Bayly: Were you there then?

No, thankfully. That member’s older than I am; I’m not going to take that!

Anyway, one of the things that successive Governments have been very steadfast on—

💬 Hon Member: You’ve just been to Mongolia and ridden on a horse.

💬 Hon Member: You couldn’t tell by looking at him!

—boy, who needs enemies?—is that there is a complete consistency across all goods and services, with very few exceptions: exports, financial services, some residential rentals, but everything else has GST on it. In fact, you could argue that the services being offered in this bill actually do have an implied GST on it, because the Act actually says if GST is not mentioned, it’s deemed to be included in the price. But this Government has no problem completely mucking up a pure system.

One of the things that’s really sad, I think, and very concerning is that this could stifle innovation, because what we’re now going to have is a situation where if somebody does want to rent out their crib or their bach, and they put a sign up on the local dairy and they make a private arrangement with somebody who wants to rent the bach for a week, that’s not going to be subject to this regime. But if the very same transaction is conducted on an online app, just because it’s overseas-based, then they’re going to have to jump through this multitude of hoops, even if their total revenue annually is under $60,000. That’s wrong. It’s inconsistent with everything the Labour Party stood for when they introduced the GST Act in 1986 and have steadfastly followed, as Governments of both colours have done, not to meddle with the GST system. But, oh no, Minister Parker sees an opportunity and an IRD policy wonk has decided that this is the most efficient way to do it. Well, I strongly disagree with that from an efficiency perspective. But certainly, in principle, the consistent thing to do—and I respectfully disagree with Damien Smith—is that it doesn’t matter what the platform is, if the person offering the service has turnover of less than $60,000, they shouldn’t be treated inconsistently.

Now, there was no reference—and let’s get to the elephant in the room—by any member of the Labour Party in their second reading speeches about the real big thing this bill does, and that’s confirm rates of tax for yet another year. We know that inflation is the biggest tax of all, and yet this Government steadfastly refuses to increase the thresholds to adjust for the massive inflation that they have caused by their profligate spending, and that’s wrong.

I talked, I think in this bill last year, because, of course, we set tax rates every single year, about my previous role as a hospital manager, and the nurses when I left there 15 years ago would have to have been on the very, very top scale of the registered nursing pay scale or even a clinical nurse specialist or first-year charge nurse in order to be on the 30 percent tax bracket; now a second-year graduate doing a few weekend shifts and evening shifts will be on the 30 percent tax bracket. That’s wrong. That’s the thief of inflation. The only beneficiary of that is the Minister of Finance.

💬 Shanan Halbert: Back to the bill.

And that’s why—this is exactly in the bill, Shanan Halbert; we’re setting the annual rates of tax. God, somebody, I don’t know. This is exactly what we’re doing. In fact, it’s actually what we’re not doing. We’re not changing the thresholds through this bill in order that people can get to keep a little more of their money. The reason the Government won’t do that is they have a steadfast belief that they know how to spend Kiwis’ money better than Kiwis do.

Well, we’ve heard a lot about consultancy fees and contractors’ fees and billions being poured into health and education for poorer outcomes. I actually back New Zealanders to know how they should firstly keep and then spend or save their money. That’s where it comes from. No Government should take a single penny more than is required to deliver the public services—

💬 Andrew Bayly: Not according to Dr Deborah Russell.

That’s exactly right, Mr Bayly. Well, I think we’re going to hear a lot more from those New Zealanders over the next few months about what they think about the quality of the spending that the rates of tax we are setting in this bill will generate, and it won’t be good.

💬 Andrew Bayly: Maybe Shanan Halbert will.

Well, Shanan Halbert doesn’t even know what bill we’re debating, so I don’t actually think we’re going to get much of a quality contribution from that member. But that’s OK. It’s probably going to be a slightly tighter race, but I do also think he might be on a limited time span as well.

This is a really, really bad bill. It’s a sad day for Kiwis, who, as a consequence of this, are going to have inflation rob them and have tax rob them.

Thank you. It’s a pleasure to speak in support of the Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2). This is a bill that I sat in on the Finance and Expenditure Committee for, and I first of all want to just reach out and congratulate the Hon Dr Deborah Russell on her promotion; she gave a good contribution on this bill. I also want to congratulate my friend the member for Tukituki, who I thought gave a very entertaining contribution and I enjoyed it a lot. But my job as the final speaker for the Government is really to give you a little bit of an overview about what this bill is about.

The first thing I want to do is object to the statement that was made that this Government has caused inflation. If you look around the world—if the ordinary New Zealander looks around the world they will see that that is just not correct. That is a cynical statement because the inflation that we are facing—the fact of the matter is we all really know that this is an international phenomenon and we’ve done damn well in the circumstances. Because we have had a pandemic and we have a war and we have all sorts of issues that caused this, and actually the Government is addressing those issues by making sure that people who need support get it.

That is being done because we have a healthy tax system, because we actually have kept a very even keel in this time, and we have taken actually no more than we’ve ever—we’ve always kept the promise about tax and this bill keeps that promise again. This bill is one where the tax rates don’t go up. They stay exactly where New Zealanders expect them to be. And so we can play all sorts of games about how terrible it is that Labour is not doing an adjustment on inflation, which, in fact, of course the National Government didn’t do. So we can do this kind of thing or we can play it straight. And if New Zealanders listening to this want to play it straight, they know that they’re not being taxed any more than they ever were, because this reinforces the same tax rates. So Labour has kept its promise.

It’s also managing to spend the money that’s coming in, in tax, on things that really, really matter to New Zealanders, like flood relief right now—targeted flood relief. I am very, very much in favour of careful spending and I am proud of the fact that when these floods have happened, when the cyclone has happened, we have been putting money into the right things and we are being very careful about making sure that we respond to the actual situation that is in place. Because one of the things that we have noticed is that it is not the same for everyone. The Labour Government are listening and actually people like the member for Tukituki are telling people in this Government—because they’re the members that are on the ground in those places that are most affected—exactly where that money needs to be spent, and it’s being spent there. And it’s being spent not out of magic but out of a fair tax system.

Now, the system hasn’t been entirely without its problems, and one of the problems it has had is it hasn’t been a level playing field between some people and others in our system. So people who have been engaged in platforms have actually had an advantage. It has not been fair on other people and I think most New Zealanders know that. I think Dr Deborah Russell was very reassuring in her comments that she made, just basically pointing out that when there is scaremongering it’s probably best to look at the detail, and actually the people who will be involved in incomes of under $60,000 can get a refund of 57 percent. So, again, there’s very much an eye to the detail and fairness that’s coming out.

One of the things I wanted to add to this debate was the issue with regard to information swap on these big digital platforms. That’s actually really important. It’s a swap of information between different countries in the OECD with similar rules. It means we get the tax that we need from our people who are overseas and it means they get the tax they need and we all know what’s actually going on. So we don’t have the development of an economy that is outside of our system, and everyone gets treated fairly. We live in the big wide world. Things are changing all the time. We need to be progressive about these things and this is going to address that.

Finally, I want to talk about build-to-rent, because it’s one of those things that I’m incredibly passionate about. So what I want to talk about is the fact that we actually, in this situation, have targeted the interest deductibility. What a damn good idea that was, because where do we want the houses built? What kind of houses do we want? Do we want people just going and buying their neighbour’s house, turning it into a rental, kicking out a person who could actually buy it? No, we don’t. We want them building houses and we want international money as well. I don’t think that that’s off the table, as was suggested by Nicola Willis. We want the big super fund. We want lots of people to come in who’ve got expertise in building long-term rentals. That is actually very important. That’s important to our economy and this targets those people and it makes it more attractive.

So this is a targeted interest deductibility; good! That means that when you are making an investment in a house and you want to do it as a rental, you really will put it into one of these kinds of establishments and we’ll have a lot more housing stock. I’m not actually a believer in everybody having to own their house. I would like to see different groups of people being able to rent rather than buy. And those are people like my parents who are old and it would be nice for them to have the capital from their house. It’s young people who might not actually have the deposit for a house. I want them all to be in stable, secure rental and this is something that will help that happen. I commend the bill to the House.

The question is, That the amendments recommended by the Finance and Expenditure Committee by majority be agreed to.