Gilmore Aaron: Taxation (Consequential Rate Alignment and Remedial Matters) Bill — Second Reading 
Gilmore Aaron: Taxation (Consequential Rate Alignment and Remedial Matters) Bill — Second Reading 
[Volume:659;Page:7873] 
AARON GILMORE (National) 
: 
 I rise to add to the conversation on the Taxation (Consequential Rate Alignment and Remedial Matters) Bill. It represents another example—as prior speakers on our Government benches have talked about—of more tidying up and loosening up a bit of the tax burden on mums and dads around New Zealand. But as previous speakers have mentioned the big issue of particular interest is resident withholding tax and the default tax rate on interest particularly for those who open new bank accounts. There was constructive conversation around resolving that issue with the officials and some of the submitters and some quite innovative solutions were put forward. It represented a good step towards solving that problem. 
It is interesting that for those people setting up new bank accounts—like the one for my new nephew who was born yesterday—a default mechanism will be put in place from 1 April 2010. It is a good thing in many ways. The Inland Revenue Department can liaise with the financial institutions particularly the trading banks to ensure that those mums and dads who open new bank accounts have a bit more information to know what their rates should be. That way there will not be an ability to be overtaxed. That being said there are still a whole lot of requirements on taxpayers to pay a fair and equitable share of tax and to provide the Inland Revenue Department with the appropriate tax rate for their income levels so that people know what they will be paying. 
This is one of those bills about which I think in the future people will ask why we did this. We have had a lot of rhetoric from the other side of the House about tax cuts and changes and the Government doing all sorts of things. At the end of the day this bill will reduce the tax burden for a number of people. It will reduce the information that they have to provide because of the way that we are aligning these tax rates. I think that must be a good thing. 
I want to focus most of my effort on two aspects of this bill that have not been talked about. One is the issue of the non-disputable requirement to pay tax. There have been a number of issues in New Zealand with individuals or corporates arguing over whether they should pay tax and refusing to pay tax under dispute. Under current law there is no requirement for a person to front up and pay tax even if that person is refunded subsequently and proven right in arguing with the Inland Revenue Department. We have had a couple of high-profile cases in Christchurch where phoenix companies or high-profile individuals refused to pay the amount of tax under dispute and then took their companies or organisations down with them. I do not think that is a good thing. This bill fixes that by making it a requirement that people pay tax—it is a non-disputable requirement to pay—but it retains the right for people to dispute the amount of tax that may be payable. That is a good aspect and one that other speakers have not touched on. It is a good positive thing in this bill which will help reduce some of the tax evasion and tax avoidance that exists in the New Zealand system. 
We are very lucky to have quite a low level of avoidance in our system as pointed out yesterday in a report that talked about the low level of corruption in New Zealand. Making tax payment non-disputable is an important step to try to reduce that small amount of behaviour from certain individuals and organisations arguing about paying tax. In fact I have had one individual in my office who thought it was his right not to pay tax at all and he had spent his entire time in dispute with the authority. To me that is revenue forgone that could have been used to provide mums and dads with the services they want the Government to provide through the tax revenue. I think that move is a good step forward. 
The other aspect that I will touch on a bit more which was mentioned by some earlier speakers is the issue of electronic communications. It has been a problem for the authority and it was mentioned in much of the advice that we received in the Finance and Expenditure Committee. The authority could not be sure that electronic communications to interest payers had been received by them so the authority was required to send written bits of information. This bill makes a change that means that where the authority has good reason to believe that an electronic communication like email has been received then it can carry on as if it was received. That will be another good step in reducing a little bit of extra administrative cost and burden for both taxpayers and the authority. That is an extra saving of administrative cost and our Government is all about saving money on those bits of regulation and red tape. 
We have heard some discussion from members on the other side of the House about what the Inland Revenue Department might do to resolve the issue around the change in resident withholding tax rates. I have utmost confidence in the officials and they have pointed out to us their plan to resolve that particular issue. They will put in a good education programme so that new mums and dads—like my brother and his wife who had a new baby yesterday—will be able to get good information so that they can set up a new bank account for their new baby. In fact most new accounts are set up for newborn children and 64000 or so children have been born in this country this year so far. 
We had a number of other discussions on this bill and one of the other issues that has not been picked up on is the alignment of the portfolio investment entity rates. Portfolio investment entity rates allow a bit of extra tax deduction for those investing in certain types of vehicles which is a good thing. This bill aligns not just the resident withholding tax rates but also the portfolio investment entity rates and that is a good thing. We obviously still have a bit of work to do on trying to get some of those rates down further. We would love to be able to get our tax rates down further and maintain our service level in some way. 
I think that this is a really good bill as it resolves some of those niggling little issues that exist around taxpayers and non-disputable tax. It resolves some issues for the Inland Revenue Department in terms of electronic communications. It resolves the issue that exists around resident withholding taxes and the ability to get the right tax rate for taxpayers and it helps the department to engage with financial institutions to help people get the right tax rate so that they pay a fair and equitable amount of tax. 
There are a number of other changes in this bill but I do not think I will bother the House with those at this stage. There has basically been agreement across our select committee and across the House today on those changes and I commend the rest of the bill to the House.