Smith DamienDAMIEN SMITH (ACT): Thank you Mr Speaker. The only crusade in this House today is the pursuit of higher taxes by this Government. The policy objective of this bill is to set the rates of income tax for the 2023/24 tax year. We have in our position the holy water and the stake to the heart of Thomas Piketty in the ACT alternative budget which gives New Zealanders a fair go and gives them an alternative to vote on against this high-raising taxing Government. Then we will see where the public fits. So the Budget itself because it's important to put this in the context before going to the bill has unveiled weaker profiles for budget balances and upward trends in debt and bond issuance largely driven by higher Government spending. There's been lots of pictures of cute little toddlers and mums in the newspapers today but the media has failed to see that we are spending more which means we have more debt and now we will have higher interest rates. This bill contains a major tax change whether the Minister wants to admit it or not. Labour's build-back project has left us all waking up this morning across the country to a situation where taxes have gone up $86 billion 40 percent. We can't keep doing this and we have to actually get to the stage where some serious pragmatic decisions have to be made. Mums and dads who have a house who have a rental property and family trusts and a bank account that's earning a little bit of interest and rental income—these are not mega-rich people. I don't know what this is being discussed for in terms of targeting the mega rich but the real damage here is to the 400000 registered trustees people who are waking up this morning trying to explain to their kids and partners what this means. In lunch arenas around Auckland today the tax lawyers and tax accountants will be contemplating a decision that was clearly premeditated. It's sad when the economic hitmen and hitwomen that usually come into our country are sitting in our front benches and doing these sorts of perverse distortions of people's wealth. Just to get on to the bill the rules as my colleague has said on the Tax Administration Act around Global Anti-Base Erosion are very complicated and it does need a glossary to understand the 26 abbreviations. Submitters have strongly advocated the position of the Government ceding sovereignty to the OECD. We will not be ceding sovereignty to the OECD in anything and this may be a legitimate exit route for some of the economic managers in the Labour Party but it's certainly not going to be the destiny of this country where we allow super-national organisations to tailor our tax policy in a way that can't be explained. You know quite clearly the material that's been given us the disclosure notes hasn't stated if there are any New Zealand Bill of Rights Act issues. The Justice website hasn't been updated to cover this bill and it includes a short statement about the legislation design and advisory committee who have agreed that New Zealand should just incorporate OECD rules into our legislation with no further explanation analysis. This bill gives the Governor-General the power to decide when the legislation applies from. How can this be happening in a modern democracy? Moving on to the many New Zealanders who have a family trust they're going to be really unhappy to learn that the Budget has increased their trustee tax rate from 33 percent to 39 percent with effect from 1 April 2024. For a Budget that was badged with no major tax changes this feels like a major change for the 400000 trusts registered in New Zealand. The trust has gone out of trusts when it comes to the economic management of New Zealand's tax policy. This move follows the introduction of significant disclosure requirements which trustees will have recently grappled with in their 2021-22 tax returns and support for the change comes in the following comment in the Budget press release: Ministers made clear then that if analysis indicated high income earners were circumventing the rate through the greater use of trusts the Government would move to address this issue. New information from the Inland Revenue has shown an almost 50 percent spike in income subject to the trustee rate from $11.4 billion in the 2020 tax year to $17 billion". Given this statistic predates the trust disclosure data which has just been collected it's not clear what the real purpose of the disclosure rules was and the decision to increase the trustee rate hasn't been based on that data. The increase in income in 2021 is hardly a surprise as a natural and expected reaction is to increase the personal tax and something that Inland Revenue has indicated they didn't have a concern with. The Budget press release attempts to suggest this change wouldn't materially impact most trusts with the comment that only a small proportion of trusts will pay most of the additional tax. The top 5 percent of trusts with some taxable income in the 2021 tax year accounted for 78 percent of all trustee income. That's $13 billion out of $17 billion. This is estimated to raise only $350 million per year. The fact that the majority of trusts will not be paying the majority of tax will be of little comfort to the significant number of trusts held by regular New Zealanders with a marginal tax rate of 33 percent or lower. The change to the trustee tax rate is included in legislation on this table. Thankfully it will be subject to a select committee review and lots of questions will have to be asked then. Moving on to other policy aspects—we've touched on the Global Anti-Base Erosion rules but the lack of consultation means that we don't understand the consequences. The taxation of back-dated lump sums—we've been through the detail and it seems sensible and overdue. The payment of KiwiSaver contributions to paid parental leave seems fine. The taxation rule over relief—it's sort of fine but complicated and based on the Christchurch earthquake rules. Schedule 32 of the overseas donee status seems fine and extending the tax exemption for non-resident offshore oil rig and seismic vessel upgrades which comes up every few years is important as otherwise oil rigs wouldn't come here or they will change a lot more. On the remedial matters generally these seem fine but haven't been looked at in detail. The main home exclusion construction period is just an example of how these rules are punitive. The flooding tax relief remedials we support and we support the targeting of helping the female population with regards to KiwiSaver. So we would say this is a major tax change. There's more spending more debt by this Government which means that they have to pursue more revenue. However the beneficiaries—and if you are a retiree or a superannuitant today you'd be seriously annoyed with this Government because any little small piece of revenue that you've got above your pension is now suddenly going to be taxed at a higher rate. Hon David Parker: That's not correct.DAMIEN SMITH: It is correct. Hon David Parker: That's not correct.DAMIEN SMITH: So let's challenge that in the committee and let's have a look at that.So we the ACT Party do not support this bill. The Government is now planning to borrow $10 million more than forecast by the half-year update in December just six months ago. And this is all inflationary. There's no free lunch except if you're sitting over in the Beehive and the balance payments record at $34.6 billion is blowing out. So there's two tribes emerging now: if you've got children you get benefits plus interest and inflation; if you're on the other side in the productive economy you get inflation and you get higher interest rates and higher taxes. Even though little things have been handed out for childcare this Budget has meant that every household is now $11000 worse off and further in debt as a nation."