Woodhouse Michael: General DebateText is incorporated into the Bound VolumeWoodhouse Michael: General Debate[Sitting date: 13 April 2016. Volume:713;Page:10469. Text is incorporated into the Bound Volume.]Hon MICHAEL WOODHOUSE (Minister of Revenue): In addressing the many comments that the Leader of the Opposition has made on the so-called foreign trusts I am not sure—I am a bit confused. I do not know whether to speak more loudly because he is deaf or more slowly because he is stupid because frankly that is where we have got to. I have got a dilemma: either he is completely obtuse about this issue or he thinks that the New Zealand public is because he keeps banging on about things that are simply not true. I respect anybody’s right to have a different opinion but they cannot have a different set of facts and these are the facts: there is no tax avoidance or evasion in New Zealand in respect of foreign trusts.Hon Annette King: Rubbish!Hon MICHAEL WOODHOUSE: These are—see the member says “Rubbish!” right? Cloth-eared again. These are foreign trusts owning foreign assets and earning foreign income—there is no tax obligation in New Zealand. On Monday 11 April Mr Little said: “The reality is the Government is allowing the world’s richest people”—here is the kicker—“to hide their wealth in New Zealand and not pay their fair share.” There is no wealth hidden in New Zealand with these foreign trusts. Otherwise here is the thing: they would not be foreign; they would be domestic trusts. If there was any money in New Zealand—Hon Annette King: That is so dumb.Hon MICHAEL WOODHOUSE: —then there would be a tax obligation to the Inland Revenue Department and an anti - money-laundering obligation including to the New Zealand Police.And here is “dumb”: Mr Little apparently released his tax returns—no only he did not; he released his personal tax summary. A personal tax summary is not a return of income tax and when that was pointed out to him his press secretary said something like: “Oh well there may be other things like a small amount of interest income on his savings.” Can you imagine what Labour would have said if the Prime Minister had given that sort of response? I do not need to remind you that a certain David Shearer is a bit forgetful about offshore interests is he not? Fifty thousand dollars of offshore interest in a bank account that he forgot about—but we did not go on for too long about that did we? We gave him a tease.Even today in question time—here in question time today—the breathless revelations that Mr Brash and Mr Shewan went to the Bahamas. Here is why: they advised the Bahamas Government on how to set up a tax regime to make finance services to offshore companies zero-rated for GST. Guess what? So is ours—so is New Zealand’s. Roger Douglas’ GST framework which is the world leader gives the opportunity for New Zealand tax and accounting firms to offer services to offshore companies at a rate that is zero-rated for GST. That is sound tax policy and we are losing the plot on the discussion about New Zealand’s world-leading tax system.Here is why it is so sad about today because today is a very good day for small businesses in New Zealand. The vast majority of our businesses are small: more than 90 percent of them employ fewer than 20 people and 97 percent of them employ 50 people or fewer. Small business is the backbone of this country and of this economy. To be able to announce today that there is a package of tax measures that will make life so much easier for them is something I think we should be very proud of as a Government—I certainly am. Here is why. What businesses say to us—because we talk to business; in fact we give them a damn good listening to—is that provisional tax is very very clunky and inefficient and does not fit with the business model. So the accounting income method using accounting software is going to make meeting tax obligations much much easier. It will fit with a company’s income flows and cash flows and avoid the late-payment penalties and the use-of-money interest that has been a burden on small business for some time. We have listened and we have delivered.We have also made significant changes to use-of-money interest where people using the uplift method who make honest underestimations or have a really good year should not be punished for having a better year than the previous year and so use-of-money interest will apply only on the third provisional tax payment. Even then they will have an opportunity to bump it up if they can see that their income is going up. These are good policies. This is good sensible tax policy. It is the sort of policy that New Zealand’s tax framework is renowned for globally including amongst the OECD and I stand very strongly beside it.