Nash Stuart: Taxation (Bright-line Test for Residential Land) Bill — In CommitteeText is incorporated into the Bound VolumeNash Stuart: Taxation (Bright-line Test for Residential Land) Bill — In Committee[Sitting date: 10 November 2015. Volume:710;Page:7858. Text is incorporated into the Bound Volume.]STUART NASH (Labour—Napier): The great thing about the English language is that words have different meanings. Sometimes in this sort of legislation it is hard to know which meaning to take. I mean we are talking about a brightline test. If I look it up in the Oxford Dictionary which is sort of acknowledged as the pre-eminent dictionary amongst dictionaries the definition of “bright” is “giving out or reflecting light”. This bill gives out no light whatsoever. Another definition is “vivid and bold”. There is nothing vivid about this and it certainly is not bold. Another definition of “bright” is “intelligent and quick-witted”.I remember about 5 or 6 years ago the Inland Revenue Department published a paper on the cost of speculation—i.e. the cost of speculators not paying tax and hiding behind things like the intention test. So the Government brings this bill in. It acknowledges there is a problem so the Government brings in this piece of legislation which has the word “bright” in it in order to fix the problem and then the Minister of Finance comes out and says: “It’s only going to raise $5 million.” How do you go from a problem of $250 million a year to raising only $5 million?This is the “not so brightline test”. It is an absolute fail.If we have a look at the Oxford Dictionary definition of the word “test” it is “a procedure intended to establish the quality performance and reliability of something”. Well if this is a test—Rino Tirikatene: It fails.STUART NASH: —you are dead right you are dead right—this fails on every single measure. The reason I say that is that first of all the industry does not like it; secondly it is not going to make any difference; thirdly it has wasted a whole lot of time in this House; and fourthly it is retrospective like my colleague Mr Cunliffe talked about before. This is tax legislation. It is not supposed to be retrospective.We all know how this law was made. We know how this law was made. Mr Key had one of those brainwaves—you know “the intelligent and quick-witted”. Unfortunately the way it was translated—you can imagine it at the Inland Revenue Department. They were sitting there when Mr Key and Mr McClay came out and said: “I know. Let’s put a 2-year brightline test in.” You could hear the guys at the Inland Revenue Department saying “No please please don’t bring this before us.” and he did—and he did. So the Inland Revenue Department officials had to come to the Finance and Expenditure Committee and you could see them—you can tell when they are forced to put legislation in place that they do not like because the eyes sort of drop. Mr Cosgrove goes hard and asks “What about this? What about that?” and they do not really have the answers. The eyes drop. There is no enthusiasm. The Inland Revenue Department—not only KPMG and not only the lawyers but the Inland Revenue Department—knows that this is not good legislation.But what I would say is that there is one group of people one industry that I think believes this is really good legislation and that is the speculators. It is the speculators. As acknowledged by everyone this is not going to catch those speculators in any way shape or form. The $250 million avoidance industry may now be the $245 million avoidance industry but there is still a really big industry out there. So this is a bill you have when you are not actually having a bill—I must admit the phrase has been used before. But goodness me it is not good legislation.So I think it should be called the “Not So Bright-line Test Bill” because it will not fix anything it does not give out any light it does not reflect anything it is not vivid it is not bold it is not intelligent it is not quick-witted and it is not a procedure intended to establish quality. In fact there is nothing quality about this. There is nothing performance about this. In terms of reliability it is easily avoided. This is not what tax legislation is supposed to be about.When we talk about tax legislation around taxing speculator profits in fact do you know what? All the experts say it is not intended to drop the price of houses. It is not intended to collapse a bubble or prevent a bubble. It is actually intended to bring those into the tax system who are avoiding it at that point of time. So when Mr Key comes out and says “We’ve got something. We’ve got a test that we know will dampen the Auckland housing market.” this sort of legislation is not intended to dampen housing markets. It never is and it never does. What it is intended to do is bring people into the tax system who currently are not in it and it fails on that account.