Robertson Grant: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In CommitteeText is incorporated into the Bound VolumeRobertson Grant: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In Committee[Sitting date: 12 April 2016. Volume:713;Page:10412. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): In many ways my contribution picks up from where Stuart Nash left off. It is perhaps a little unusual what I am going to do but I am going to focus this contribution on one particular submission because I think it is important that it is on the record of the House and the Minister in the chair Michael Woodhouse may have something to say about this.Three options were considered of how to implement the GST on intangibles and the one that was the officials’ option which is what we have now got in the legislation is what they call offshore supplier registration. So this is effectively that the companies we are talking about are registered for GST and it puts the onus in a sense on them. It deals with them by means that are appropriate and are used by other countries. In the regulatory impact statement it talks about the European Union Norway South Korea Switzerland Japan and South Africa which adopted this kind of option. They register and they return GST if their suppliers are over the $60000 mark and it is endorsed by the OECD guidelines. But other options were considered and in particular the one I want to refer to was what was option three in the regulatory impact statement—that is the question of whether there could be a payment-based GST collection system.I want to say at the outset that I am not necessarily advocating for this but I do think it is an option worthy of some consideration. Essentially what is proposed there is that under a payment-based GST collection regime when remote services are supplied the supplier does not actually necessarily have to be involved in the collection of the GST on behalf of New Zealand in this case. Instead you could actually use the bank or the payment supplier if it was not a bank—if it was a sort of a PayPal or something like that—in the country where the person is resident and it would add the GST to the value of the incoming transaction. How that would effectively work is it would debit the GST amount from the person’s bank or credit card and retain the GST information with the transaction for future reference. Pretty much all of these purchases are now made using a credit card online and obviously as the GST is collected it would be forwarded on to the Inland Revenue Department (IRD) using the existing mechanisms that the bank and IRD have for working together. This submission was put to the Finance and Expenditure Committee by Miles and Associates Ltd and I just want to mention in the interests of transparency that it was the organisation that came to us and put forward this idea.There are some immediate benefits that are easy to think about which are that it is a simplified design it does not require reregistration all the time it uses the mechanism that we all know is used in the way that purchases are made it simplifies the overall approach that is being taken and it probably captures an increased amount of revenue potentially because the registration process does mean that some suppliers will not be registered. In my earlier contribution I talked through the fact that there are fines involved for people who do not register and that the Commissioner of Inland Revenue can chase that up. But again you do not know what you do not know and it may well be that some people will slip through the cracks. So having a payment-based approach for implementing the provisions in Part 3 would potentially add to the amount of revenue that people could get.There are no additional costs to New Zealand businesses that are exporting goods and services going the other way if you adopted this regime across the board and the seamless handling of goods—you can expand this out to the tangible sector more easily as well which is another point that many people would like to see happen. It creates a neutral set of relationships between businesses if businesses are importing goods by putting it only in the hands of the payment providers.I am not saying it is simple and I am not saying that it has even really been tried anywhere else but it is the kind of option that as we look to the future of how we are going to create the level fair playing field for taxation in New Zealand we should be considering. It was a little bit unfortunate to my mind that the submitters had in fact already submitted when the IRD’s discussion document came forward. The committee did not consider that submission in detail and I just want to put on the record that I think it still deserves consideration.