Adams Amy: Taxation (Business Tax Measures) Bill — In Committee 
Adams Amy: Taxation (Business Tax Measures) Bill — In Committee 
[Volume:653;Page:2008] 
AMY ADAMS (National—Selwyn) 
: 
 I am very pleased to rise at this Committee stage to talk to the Taxation (Business Tax Measures) Bill. It is a bill that I have spoken about before in the House and I have watched it with considerable interest as it passed through the Finance and Expenditure Committee. As we have already heard this afternoon it has been very pleasing to hear the multipartisan support for the bill and the way—now so more than ever—in which all parties have really come together to recognise the importance of enacting exactly these sorts of changes into New Zealand law. 
I think that what everyone needs to be clear about is that the small to medium business sector is really at the engine room of our economy. These are the businesses that will see New Zealand through the recession and get us ready to be in a strong position to come out of that recession. As my colleagues on this side of the Chamber have already spoken about we have to foster and protect these businesses as much as we can because if we let them go it is not a matter of flicking the switch and having them back when we are ready to go. If we do not do all we can to protect our small to medium enterprises then New Zealand will not make the sort of recovery that it can and should make out of this recession in time to come. 
Certainly in my area of Selwyn the small to medium enterprise sector is the predominant one. Selwyn does not have a major metropolitan commercial sector; most of the business in my electorate is in the category that is affected by this bill. These businesses are calling for exactly these sorts of changes. So it is very pleasing to see the bill pass through the House and it is very pleasing to see support for it. 
We have heard a number of other speakers this afternoon talk about some of the issues that we looked at closely at the select committee. I think that everyone in this Chamber agrees that we want to do what we can for business in these difficult times. But we have heard from the Minister in the chair the Hon Peter Dunne and I completely endorse what he has to say—that we need to balance some of the ideas that are put before us which may be very valid at face value with our ability to forgo revenue. The Minister has made that point and I think he has made it completely correctly. For every advantage and piece of assistance that we can give to businesses we do have to look at the overall fiscal cost and that is certainly something the select committee looked at very closely as we worked through the various submitters’ suggestions. 
One thing I want to talk about that our committee looked at closely is the work that the Inland Revenue Department is doing around instalment arrangements and the help that can be given to taxpayers who find themselves in a situation where they are not able to pay their tax on time. This is an ongoing issue for the department and certainly in the times ahead it expects this to be an issue that becomes considerably more prevalent. We looked at what the department was doing around that—the instalment arrangements that it was talking about and how it was getting that information out there. I think those discussions were very fruitful and will certainly be taken away by the department to work on. But as we have seen in the bill the changes that have been recommended by the select committee are largely technical in nature and address drafting errors. Fundamentally what we see in the bill are the policy matters that we have already discussed through the first and second readings. 
When one gets down into the detail of the bill and unfortunately this is a bill that one needs to look at the details of in order to get the real flavour of it—it is not just a one-hit “this bill does x”—one sees that it does a number of small things each making important contributions. Mr Foss has talked about his favourite provision being the uplift provision and I am in some agreement with him on that. The change to the uplift rates will make a considerable difference. The interesting thing with tax bills which I am certainly learning as a fellow new member on this committee is that when one starts to drill down into what these benefits mean to a business community they are quite real. In the first reading of the bill we heard that the provisional uplift rate change will put another half a billion dollars into the pockets of small to medium sized businesses—that is $500 million of extra cash flow that will pump through the arteries of the New Zealand business sector as a result of that one change. It is the sort of thing that rolls off the tongue easily and it sounds like a relatively minor change but it is a real tangible stimulating benefit to the economy and it cannot be overlooked. What it means is that in the 2008-09 and 2009-10 years instead of having the 105 and 110 percent uplifts automatically applying it will be the 100 and 105 percent increases. Of course 30 percent of taxpayers are currently on a 95 and 100 percent basis and 30 percent of taxpayers will now be entitled to lower uplift rates of 90 and 95 percent. 
I want to touch quickly on two other matters. One relates to GST and it is a matter that is near and dear to my heart and it is the raising of the payments basis qualification level and keeping it up to $2 million before a business has to go on to the invoice basis. Believe me as a small-business owner one could be talking about hundreds of thousands of dollars that suddenly have to be found when that invoice basis threshold is hit. Once again by moving that amount to $2 million a lot of cash flow will be put into the heart of the New Zealand business sector. It will keep businesses viable which at this time when we are all working hard to protect jobs is fundamental. So that is one provision that I am very very pleased to see. Alongside that provision is the 6-monthly registration basis increase and lifting the threshold to elect to register up to $60000 which are all matters that make a big difference. 
The final matter that I want to mention briefly—and I do not think it has been talked about this afternoon—is a relatively small matter in relation to the deductibility of legal expenses of up to $10000. As a previously practising lawyer and knowing the machinations that are often worked through to categorise legal expenditure of reasonably minor amounts I know that it involves a lot of consultant time—business time—being wasted on what is effectively pretty small bickies. To be able to say that up $10000 legal costs are deductible is exactly the sort of simplicity we need to bring more of into our tax system. So that is a measure that I wholeheartedly endorse in application and in philosophy. 
Does the bill go far enough? Well it will not stop the recession but it will keep businesses functioning that might not otherwise function; it will protect jobs; and as I said at the outset it will mean that those businesses are there to help fuel the recovery when the time comes. The bill is being looked forward to in the community and I know that is certainly so in my patch. It is very much needed and I am pleased to see that it is being delivered.