Taxation Principles Reporting Act Repeal Bill

Members, we now come to Part 2. Part 2 is the debate on clause 4, “Repeal of Taxation Principles Reporting Act 2023”, and clause 5. The question is that Part 2 be agreed to.

Thank you, Madam Chair. We have had an extensive debate on this already—on Part 1 of this bill. I do want to talk just briefly on Part 2 of the bill. It has the operative clause in it, the one that actually does the repeal work of the Taxation Principles Reporting Act.

The Taxation Principles Reporting Act asks for Inland Revenue to prepare a report—an interim report some years, and a triannual extensive report—reporting on how the tax system does against some key principles. The principles are listed in Schedule 1 of the Act. The principles are: horizontal equity, efficiency, vertical equity, revenue integrity, compliance and administrative costs, certainty and predictability, flexibility and adaptability. Reasonably well-agreed principles.

However, in his first speech on this bill, in the first reading of the bill, the Minister of Revenue said that the Act serves no purpose because it just was an exercise in—and I quote—“redundant reporting”. Look, that redundant reporting implies that this information on these principles is available elsewhere and in a form that is readily available to New Zealanders, to citizens. So I would like to hear from the Minister where else we can get a coherent and easy-to-find, easy-to-access piece of reporting on the New Zealand tax system that encompasses those key principles, or, even if not these particular principles, the generally agreed principles that tax experts use when assessing tax systems.

So if the Minister could let me know where else we can find this information that makes the Taxation Principles Reporting Act something that engages in redundant reporting.

Yeah, in the interests of good back-and-flow, as I’ve noted before the Inland Revenue’s annual report does include significant amounts of information in a variety of areas. I acknowledge the member’s point in terms of a concise table of principles, but the report does include a comprehensive nature of those elements within that report. On that basis, I’m comfortable that that information will cover and suffice the member’s request.

E te Māngai, tēnā koe. Tēnā koutou e te Whare. As the previous speaker’s just alluded to, what we’re in now, with Part 2, is the operative part of the legislation, and to that effect I have a few questions for the Minister, albeit referring to what was referenced in Part 1, but it was actually about the substance of this legislation, that being the taxation principles reporting repealment.

The Minister said in the debate on Part 1 that there is no report and that he has not seen any draft version of a report, which, again, just for the sake of the record, under the status quo of the laws currently on our statute book, should be done, at least in draft form, because it is due to be published, as the law currently sits—until it is repealed and this Government rams through under urgency the third reading of this bill. As it currently sits, the IRD should still be functioning towards publication on 31 December.

So I just really wanted to drill into that point as made by the Minister. Is it the case that he has been offered absolutely no evidence, data, briefing to the incoming Minister, memorandum, correspondence, or otherwise on where this work programme was at under the IRD’s work programme? So that’s the first question: where is this work programme currently at, given where we are at in this stage of the development of that report under status quo legislation as required, because that legislation still right now sits on our statute book?

To the second point, the Minister has made the point that he still expects that there is going to be transparency of reporting from the IRD. This is an interesting one, because it’s also referenced within the regulatory impact statement here, and I quote: “Inland Revenue intends to consider means of improving its current reporting under the Tax Administration Act 1994,”—good year, that was—“subject to internal resourcing and government policies.” To that effect, what I’m hearing is that the IRD is asking this incoming Minister to actually continue to allow them the resources to continue something along the lines of the reporting as is required under the status quo legislation which they are rushing under urgency to repeal. And in needing that resource, I have a secondary flow-on question, which is: what kind of resource does he expect or anticipate allocating the IRD so that they can do that form of reporting, which at this point is ambiguous? We have no idea what that might look like.

So just to be really clear to the Minister, who I hope is writing these questions down so that he can answer them—that first question there, or the first part of that second round of questions, was on the engagement that he has had with IRD around the fact that they intend to still do more transparent reporting for the sake of accountability on the tax system. The second tranche of that second question is: therefore, what resourcing is he anticipating giving the IRD to undertake this new ambiguous work programme of potentially reporting against tax principles? We’re not quite sure. Because we know, again, under the status quo, per his own advice, that we’re looking at 2.5 fulltime-equivalents (FTEs) being allocated to this work programme—again, for the sake of the House, 0.06 percent of the entire workforce within the IRD. This is minuscule, and it feels as though this is very much a matter of throwing out the baby with the bath water.

This kind of leads to the follow-on question of why not just allow this report to come out for the sake of having a more informed public debate on what it is that the National Party is so vehemently opposed to, as opposed to just trying to get rid of this before it comes out into the public light, based on a bogeyman that we can’t really all conceive of in any meaningful way because we don’t know what the shape of that potential report might look like.

So just to really re-emphasise that point to the Minister, is it the case that he has had absolutely no engagement with his officials from IRD, given that he is saying that he’s seen no report or no draft report, that no report exists—he’s had no engagement with them on where they’re at in that work programme, as is due out in six ostensible working days? Is it the case that he has had no meaningful engagement with the IRD on what kind of comes next, given his own regulatory impact statement says that they want to shake their reporting up even more so? And, thirdly, what resources are necessary to give to the IRD to do that next iteration of reporting? Because all of us are kind of in the dark here about what that might look like, and it’s really difficult to get a coherent understanding of whether that will be any different to the 2.5 FTEs currently allocated under status quo legislation.

So just responding to the member’s questions—as I said before, I have not seen a copy of the report, nor do I have a copy of a report or a draft report or any aspect of the report. The reality is that with this Act being repealed following the work which we’re undertaking at the moment, I will not receive a copy of that report, and I expect that IRD will handle any work that they’ve undertaken to date in the normal way in which they would do so in line with their policies. In regards to where we’re at, that’s where we are on the report.

I acknowledge the member’s feedback and frustration around that, but the reality is we are undertaking a piece of work with the IRD—as we are doing with all Government departments with the new Government to ensure that the Government departments’ workload and their focus is aligned with Government and coalition priorities. That is our priority. That is the direction and conversation that I’m having with my relevant people within the relevant ministries that I am responsible for. As I have said clearly, and as our Government has said clearly, this piece of work is not a priority for this Government, and hence we’re repealing this legislation.

Thank you, Madam Chair. This is just a really quick question, actually, of the Minister’s commitment in his previous response that there will be some reporting in the annual report. My question to Minister is: whereabouts in the annual report? Because the current annual report has some information about organisation and capability, it has some of the statement of performance, and it also has the auditor’s report. So I just want to have it crystal clear for this committee: whereabouts in the annual report is the Minister committing to including some reference to the principles and an assessment of it?

💬 Hon Dr Duncan Webb: Point of order.

Just before I take the Minister, point of order from Dr Duncan Webb.

I seek leave for all questions to be taken as one debate.

Leave is sought. Is there any objection to that course of action? There is not.

Part 2 and clauses 1 and 2