Copeland Gordon: Income Tax Bill — First Reading 
Copeland Gordon: Income Tax Bill — First Reading 
[Volume:606;Page:3542] 
GORDON COPELAND (United Future) 
: 
 I rise to advise that United Future will vote in support of the first reading of this bill and its referral to the Finance and Expenditure Committee. 
As Rick Barker has said this is probably the longest bill ever introduced to the Parliament of New Zealand. Some say that that is an indication of the behemoth that has been released by generations of rapacious tax-gathering Governments intent on intruding into every conceivable aspect of human activity whether moral or immoral public or private. Others claim that the complexity and length of the Income Tax Act have arisen from the ingenuity of human beings especially those from the legal or accounting professions with their ability to invent an endless array of tax-dodging devices to avoid paying taxes properly and legally due. The latter explanation casts not the tax gatherer but the tax payer as the villain and the ever-strapped Government is left with little option but to continue to pass ever more laws to close off the new loopholes that constantly appear. 
That there is truth in both points of view is evidenced by the fact that those who make their living through tax poaching often make strenuous efforts to recruit into their ranks the very best of the gamekeepers; more rarely that ultimate gamekeeping organisation that we call the Inland Revenue Department sometimes manages to lure across a well-qualified poacher. 
I think however that if we look at the bigger picture we will discover that the reason our Income Tax Act is so long is that New Zealand has traditionally adopted a highly prescriptive legal approach to tax gathering. We like to ensure that every “i” is dotted and every “t” is crossed. By comparison the United Kingdom with 60 million citizens gets by with a much shorter Act that endeavours to set out clear tax principles leaving scope for specific interpretations to emerge either through the courts or believe it or not through negotiation. I had first-hand experience of this when I worked for BP in London during the 1970s. I witnessed the company’s head taxman suitably qualified with a degree in systematic theology go off at regular intervals to negotiate the company’s tax bill with a fisc! 
Perhaps in hindsight we would have been better to adopt the British approach. However I am afraid that the genie is out of the bottle and we are stuck with this more-than-2000-page bill. I agree with Don Brash that for small businesses it is truly a disaster. They will have neither the time nor the expertise even to read this bill. So they will for all time—most of them—be locked into having to depend on employing professional advisers to get their tax bills right. That is not a satisfactory situation. 
I am not sure how to address it. Don Brash seemed to suggest that an adjustment in the company tax rate would make it simpler. I do not think it would. The only thing that I could suggest to simplify this matter for business would be perhaps to give start-up companies a complete tax holiday for a few years. That might be a more effective way of getting them off the ground as they would not immediately have to employ professionals in order to be able to pay their first or second tax bill. That really is a great impediment to business growth in this country. 
Rodney Hide 
: Is that the policy of the United Party? 
GORDON COPELAND 
: It is indeed. Take it as our policy. 
Rodney Hide 
: A tax holiday for 2 years! 
GORDON COPELAND 
: Perhaps more for small start-up businesses. It is a suggestion that I think this House should seriously consider. 
Given that reality there is much to be said for at least ensuring that the Income Tax Bill is written in plain and therefore understandable English. I certainly hope this will prove to be the case. However we need to recognise that for an entire generation of accounting and legal tax advisers this new bill plain English and all will represent a huge challenge which I am sure they could do without. The Inland Revenue Department too will have its fair share of challenges although in its case it has the advantage of having Robin Oliver the general manager of policy who told the Finance and Expenditure Committee recently that he has actually read through the entire bill. I was delighted to hear Don Brash say that he has not yet read the entire bill which implies that he intends to—[ 
Interruption 
]—and I would like to challenge Clayton Cosgrove and Rodney Hide also to read the entire Income Tax Bill. I am not sure I will rise to it myself.  
The courts too will face many challenges as they seek to come to grips with the new approach adopted and ensure they are consistent with the Government’s undertaking that although the wording may be different it is not intended that the Act should in and of itself change the underlying tax law. 
Also the members of the House may spare a thought—but I guess they will not—for the members of the Finance and Expenditure Committee who now have ahead of them the massive task of reading through the many submissions which will likely equal or exceed in volume the length of the bill itself. Given all those circumstances I personally find it important to discover a rationale for the task that lies ahead. The best I can say is that if it will deliver to New Zealand a clear Income Tax Act capable of serving our nation’s future for many years to come then the effort will have been worthwhile. On that assumption United Future supports the bill.