Ross Jami-Lee: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Second ReadingText is incorporated into the Bound VolumeRoss Jami-Lee: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Second Reading[Sitting date: 31 March 2016. Volume:712;Page:10122. Text is incorporated into the Bound Volume.]JAMI-LEE ROSS (National—Botany): It is good to see this bill back before the House after a good period of time at the Finance and Expenditure Committee. Those who listen to the debates on tax bills will know that David Bennett usually gives this speech as the first Government speaker after the Minister. I thought of trying to do an impression of David Bennett but I just could not manage it—I just could not manage it. So I will go for the calm and nicer version of the speech that Mr Bennett would probably have given.This bill as has been outlined pretty much goes through a range of mechanisms but primarily we are making amendments to the student loan scheme to have greater information-sharing with Australia. It also has some measures that help to supplement the brightline test that this House has previously passed. It also has some changes around GST for online services. Those are the three main areas that this bill covers.We had quite good debate in the select committee. I think there was quite a lot of cross-party working on these issues. There was general support for many of the measures. Of course as Mr Nash has outlined there are some disagreements about how far we should go or whether we should do it in a particular way but generally the committee worked quite constructively in coming up with some solutions to some areas that were raised in submissions. Can I just say at the outset of my speech thank you to the officials who were supporting the committee members on this bill. Thank you also to the submitters who fronted up. We always get some very high-quality submissions from tax agents and firms that work in this area on a day-to-day basis. They always provide high-quality advice and it is always appreciated by the committee. Can I also say thank you to a very unsung heroine of the Finance and Expenditure Committee Therese Turner who does a huge amount of work advising the committee as well.A big part of the committee’s time when we were considering this bill was spent around the definition of an offshore person. The way in which the bill was drafted initially effectively one shareholder or 1 percent of a shareholding in a company could have led to the company triggering the offshore person test which would have meant one person would require 99 other people the shareholders of the company to be subjected to a residential land withholding tax with regard to their purchase. We felt that was a bit unfair it was going too far and we should amend that. The definition also would have hit those with a trust. For example one beneficiary of a family trust when there could be hundreds or dozens of other beneficiaries—one beneficiary living offshore could have triggered it as well. We felt going for a 25:75 test was more appropriate so the committee recommended that. Where 25 percent of the shareholding of the company is offshore that is acceptable but anything over 25 percent is the point at which it should be triggered. So the test now is 25:75 between offshore and onshore with regard to this test.Generally though this is about providing greater compliance with the brightline test that this House has already passed. Rightly or wrongly whether you want 2 years longer or whether you want a full-blown capital gains tax the House has passed a 2-year brightline test to ensure that people pay tax appropriately over and above the intentions-based test that we already have. The House has put in place a brightline test. We now believe that it is appropriate to have this residential land withholding tax as well to ensure that those living offshore comply with their tax obligations. This will make it easier for them to comply and also ensure that we are able to collect the tax appropriately. That is why we are going down this route and generally I think we have landed in a good space.With regard to paying the GST for online services—yes there is that debate about tangible versus intangible. This bill tackles only the intangible—intangible goods with regard to offshore companies. Again I think we have landed in a good space. I think there is a general view from New Zealanders that paying GST for online goods and services is reasonable and is accepted. If you are providing an online service and you are based in New Zealand you currently have to go through the GST regime. If you are an offshore company right now you do not. That is inequitable and that is something we should sort out. It is a lot harder though when you come to tangible goods because there are a whole lot more complications at play and there is also the difficulty of collecting GST. It is actually easier when it comes to online services because it is a lot clearer as to those online services. That is why this bill tackles only that aspect.Finally on the student loan scheme yes we do have some compliance issues with regard to student loans. Again we are making further changes to make it easier for the Government and for the Inland Revenue Department to follow up those people who are not complying with their student loan scheme obligations. We have already seen some examples recently of some other measures—for example people being arrested at the border. These are having a bit of an impact on people who have not paid their student loans. This element this change will give us greater information for us to be able to track those people living offshore in Australia with regard to their student loans. I have to say though that the solution to student debt is not to give up on student loans and give people a free tertiary education which is what the Labour Party has proposed. That would have perverse outcomes and would not work and would blow out the Budget over and above the $20 billion - odd it wants to spend on the universal basic income. Again it is a bit of a joke.The Finance and Expenditure Committee did a good job of looking at this bill. I think we have come up with some sensible suggestions and changes and I commend it to the House.