Watts SimonSIMON WATTS (National—North Shore): Madam Speaker a very good afternoon and I rise on behalf of National and as the member of Parliament for North Shore. I tell you what—I wasn't going to comment on the previous speaker but then she just made a statement in that speech which I think sums up the reality of this Government and where they stand around taxation. She just stated in that speech that the Government knows how to spend money better than Kiwis and individuals. That is exactly what she just said in this House and that is absolutely the opposite position of where we stand in this House and I think any Kiwis out there when they hear that Government knows how to spend their money better than they do should have significant concerns around this Labour Government and the future of it. This bill the Taxation (Annual Rates for 2021-22 GST and Remedial Matters) Bill second reading National oppose this bill. As we've heard from prior speakers there are components in regard to the GST elements in the main that National do think are sensible but that's pretty much where it ends. I do acknowledge the chair of the Finance and Expenditure Committee Duncan Webb across the row there who I think did an excellent job in terms of facilitating the conversation around the table acknowledging we have different positions on this but in terms of his chairing of that conversation it was fair and reasonable and I acknowledge that and I acknowledge the other members around the House on that Finance and Expenditure Committee. I'm lucky to be a member of that with my colleagues.But National have been very clear around the elements of this legislation that we do not support and I'll work our way through those three components because I think it is important to provide a little bit of context in terms of one why we do have the position we have around opposing those changes and why we believe that that is not in the best interests of Kiwis around this country in terms of their ability to get ahead and be successful and live successful and prosperous lives. The ideology that we are seeing in this bill really comes down to a Labour Government that is focused on tax tax tax. The elements that are embedded within this bill while an annual rates change are all in the main increases of taxation and go right against the principle or the element that I've referred to right at the start around the fact that hard-working Kiwis out there in our communities—communities of the North Shore communities of the Coromandel communities of the Bay of Plenty that are working hard out there in terms of you know whether they are tradies or they are primary industries or working in whatever aspect around our sector—the money that they earn is earned through difficult and often challenging effort and they deserve to be able to keep as much of that in their back pockets and right now with the degree of inflation that we are seeing in this country those dollars aren't going as far as what they used to do and that's impacting on households around this country.But the opportunity here for this Government is actually to provide some degree of relief some degree of support to our local communities and local individuals and taxpayers across this country and they could have used this opportunity to do that. They could have used this opportunity to actually reflect on where we are with the fact that our tax rates have not kept up with inflation over the number of years and they could have used that opportunity to make those adjustments to make our tax system more fair. But they haven't. They've done the complete opposite of that and they've done that in areas which are going to hit home on some of our most vulnerable communities.The element around limiting interest deductibility for residential investment properties is in and of itself quite a complex statement but if I put it into simple language: if you earn $100 of income normally under the old model before this legislation coming through from Government you would be able to offset that $100 of income with some expenses and the interest expenses that are incurred through the borrowings on that—earning that income—would be deductible. So therefore if you had $100 of income say if the expenses were $10 then you would be taxed on $90. But the implication of this legislation in effect is that individuals are going to be taxed on the entire $100 in the main and that is going to impact the back pockets of hard-working Kiwis. They are stopping what is in effect a legitimate business expense. Nowhere else in our tax legislation are they making this exemption and they are saying it's because of the issues around our housing market etc. etc.New Zealand does have a housing crisis. We do have significant issues around the affordability of housing the increasing rent for individuals that have the inability to afford to buy a house and this is one of the single biggest issues in this country and it is not something that on this side of the House we've got our head in the sand on. But I think the other side of the House in terms of the Government have because what they are in effect trying to do is not going to solve or help that problem. Actually the IRD has stated that this initiative specifically will reduce housing supply and push up rents—the complete opposite of what is required by hard-working Kiwis across this country from this Government and they are not using the opportunity to resolve that; they're actually going to be making it worse. I also want to talk about the brightline test. National—we're part of that and we acknowledged when that was brought on that that was a sensible piece of legislation with a period of two years. That makes sense that is sensible that deals with the problem. But then that's been increased to five and now under this increasing to 10.Hon Member: What's that called Simon?SIMON WATTS: Well that's flipping or dubbing—Hon Member: A capital gains tax.SIMON WATTS: —or a capital gains tax at its lowest level. When a person sells a house within 10 years after purchasing it then they are going to be taxed on the sale proceeds of that home. And that is not acceptable. That increase increasing to 10 years is going to bring in a large number of taxpayers into that net. It is unnecessary and even with the adjustments that have been made through the select committee process through clause 48 proposing new section CB 16A(6)(d)(ii)—just for those at home who are looking up the Income Tax Act and I know there will be a few no doubt that aspect will go some way but it is not going to deal with the underlying issues. The test around reasonable efforts" is a broad statement and I think the reality is that that's going to have to go through a period of assessment through tax advice etc. compliance costs that are to be brought into that and again a lack of certainty. As speakers before me have said it is going to exclude particular groups that we've discussed already: those who are undertaking military service overseas. I have the Devonport naval base in my community. A huge number of individuals who proudly provide service to our country in terms of our defence forces—those are the individuals that will be potentially impacted by this type of legislation change. Parents that are assisting their children to buy a home when they're going to university across this country will be potentially negatively impacted by this. But what is important about the brightline test and the interest deducibility aspect is National will repeal both of these points when we come into Government in 2023. And we have been categorical over the weekend with our leader Christopher Luxon instead putting a very clear statement in the ground. Where does National stand around these increases in taxes? National will repeal those two aspects of that legislation.I finally want to finish with the aspect around the 39 percent tax rate increase—income over $180000. It was actually initially discussed that this would only impact a small number of Kiwis. Well it turns out through the IRD Official Information Act request that this will impact—114000 Kiwis across this country will be impacted by this increase in taxation. Another example of just blatantly doing the Robin Hood model that this Labour Government are so good at: take the money off those individuals who are successful; take the money off those individuals who are prosperous and that are working significantly hard for this country; take that money off those individuals who are taking risks to try and grow and develop this country; and tax tax tax at any cost. And you know what? What sort of message does that send to the young people in this country who are looking for ambition who are wanting to be successful? It is saying to them that under a Labour Government we will tax tax tax you and that is going to be the reality. The National Party overall oppose this legislation. We do not believe that it addresses the underlying issues that face this country. It will not help us in terms of moving forward and we do not commend this bill to the House."