Smith DamienDAMIEN SMITH (ACT): I rise on behalf of the ACT Party to make our contribution. This taxation bill sets out the rates of income tax for the 2020-21 tax year and has a number of other proposals and remedial amendments that seek to ensure that the New Zealand tax system is fit for purpose. And so Minister in a positive contribution to our thinking we just wanted to explore some better public policy wraps around what is going on.So is the system fit? Well we certainly don't think it's modernised for the future challenges we now face. We don't believe so in the ACT Party. Bad changes in taxation at this stage of the COVID-19 recovery are particularly harmful to the economy and to New Zealanders. We're not in the business-as-usual period and it's harmful to future prosperity. The Government's tax policies result in fewer skilled people coming to work here more skilled people leaving and therefore potentially an overall reduction in tax take. The attitude towards it is best summed up by the increase in the top tax bracket to 39 percent on incomes over $180000. This is not only forecast to raise a small amount of revenue but it can't even be estimated. It will also increase the likelihood of tax avoidance and distortions in the tax system when aligned to the 28 percent corporate tax rate. This will almost certainly reduce the amount of revenue this policy generates while encouraging unproductive behaviour. The policies deliver a blow to the integrity of the tax system and the Government as a whole.The ACT Party believes that the tax system is sending a negative message both domestically and internationally to people wanting to get ahead and have a go in New Zealand. The Government's tax system is the policy manifestation of a culture of tall poppy syndrome" and the antithesis of ACT's firm belief—Dr Duncan Webb: Who wrote that?DAMIEN SMITH: —in backing New Zealanders to improve their own lives Mr Webb. For too long the tax system has been used for political vote-buying by parties opposite. The current tax system is one of the central reasons that productivity growth is weak and living standards are lower than they should be and we should expect better. There are some positive steps though in this bill: the trans-Tasman retirement savings arrangement the Mycoplasma bovis and farmers bill but we have also had some negative impacts as mentioned earlier around global warming.One of the vital things about this piece of work has been the lost super in Australia. I don't think people recognise this but this is actually a $2 billion revenue problem. We must allow for greater portability of retirement savings from Australia. Treating the Australian Taxation Office (ATO) as a compliant Australian super scheme points in the right direction and there are significant moneys being held by the ATO. Finally we've made good with farmers—amendments to allow taxpayers to spread their taxable income over a six-year period when that income relates to the culling of livestock to better match the cost of purchasing replacement livestock and the stock recalled is a very positive and fair outcome for the farming community.And just to touch on global warming because I know everybody's done that before the Government's main mistake here—the estimated $26 million in Budget 2019; then it's down to $7 million. And with global travel not coming on board for another two to three years the best thing for the bill is to take this out due to COVID—either get it treated later in a tax amendment after more industry conversation or at the minimum we take a position that the date is delayed to 1 April 2024. There are some positive aspects around business and individual taxation at a technical level and they've been touched on before.Moreover this bill does very little to remedy the flawed tax system. Productivity growth in particular has been one of the biggest shortfalls of successive Governments on both sides of the House and our largest public policy failure. According to the draft report from the Productivity Commission on New Zealand firms "New Zealand's disappointing productivity performance has held back its standard of living for many years."—and that's a direct quote—and "New Zealand's position among OECD countries would be even weaker if not for the relatively long hours … that people in New Zealand work." The sad thing is that the Government would not even let the Productivity Commission address tax as a tool in their report to be released. How can you have a modernised tax system and not think about the relationship between taxation and productivity and growing the country? Productivity is around 30 percent less than the countries we should compare ourselves with such as Australia Canada the United States and the United Kingdom. That means it falls to ordinary Kiwis working longer and harder to make up the shortfall all the while the Government takes more money out of their pockets. Higher taxes prevent innovation and investment in new technologies and this will in the future be the biggest difference to the lives of all New Zealanders. We need to do better much better and we can do better. If you look at this exercise it's clear now that a complete overhaul of the tax system needs to occur with lower flatter taxes which drives growth and attracts overseas investments and makes a tangible difference in the lives of Kiwis. This is a Government that wants to develop a higher wage economy but then disincentivises earnings and make it as hard as possible to get ahead. This Government is seeking to reintroduce the same unimaginative punitive divisive tax policy that Labour ushered in under then finance Minister Michael Cullen 21 years ago. New Zealand already has the highest tax to GDP ratio in the Asia-Pacific region and the fifth-highest corporate tax rate in the OECD.Dr Duncan Webb: What about State taxes?DAMIEN SMITH: Excuse me Mr Webb?Dr Duncan Webb: State taxes.DAMIEN SMITH: No—compared to Australia we collect less corporate tax revenue on a comparable like-for-like basis. Our corporate tax rate should be not set to buy votes and score political points but to make us more competitive rather based on common-sense principles such as encouraging overseas investment in New Zealand which this bill does not even touch on and discouraging firms from employing methods to avoid paying the higher rates. This would attract overseas companies create jobs and create investment in New Zealand. Our closest partners around the world are cutting tax rates to stimulate their economies and this Government is doing and has done the opposite. It's an act of economic vandalism. We must be doing better and not worse than our closest partners to have any hope of improving living standards for New Zealanders. We do agree with Labour on one crucial issue: that a capital gains tax despite how much the Green Party try and tell them to do it is a giant step backwards. The ACT Party will always support low taxes so we can back New Zealanders to create jobs create opportunities create a more dynamic open and prosperous New Zealand. Even as an example of today of Working for Families—we believe that should be abolished in favour of giving people lower taxes for all the hard-working New Zealanders at the marginal rates. We'd like that considered.ACT's goal is to make New Zealand the most attractive place in the world to earn to save and to invest. We want economic growth and opportunity for all New Zealanders and believe that having lower income and corporate tax rates is a part of achieving that goal we all share. For these reasons the ACT Party will be opposing this bill."