Little Andrew: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — First ReadingText is incorporated into the Bound VolumeLittle Andrew: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — First Reading[Sitting date: 10 December 2013. Volume:695;Page:15377. Text is incorporated into the Bound Volume.]ANDREW LITTLE (Labour): It is a pleasure to take a call on the very important Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill. The speech we have just heard from Mr Goldsmith is the typical old-fashioned National Tory grandee speech that we hear so often—that taxes are somehow evil dirty and filthy and that somehow businesses that thrive in an environment where they get good infrastructure good governance and an uncorrupt Government do not need to pay their way.John Hayes: There’s the old unionist.ANDREW LITTLE: John Hayes knows all about it because he is another champion of the old Tory cause—run down the State lower the taxes tell businesses the leash is off but still ply them with the goodies every time they get out. Well that is not the waya decent tax system runs. It is not the way a modern country runs. It is not the way you build a productive economy.John Hayes: You’re the communist in this House.ANDREW LITTLE: And here comes the catchcry: we are all communists. Yes well the last time we heard that was of course when we had the Cullen fund. Was the Cullen fund stealth by communism or communism by stealth? National cannot get over it. It cannot get over it when you have a Government usually under Labour that functions well like the last Labour Government which produced surpluses for 9 years which built up the Cullen fund and which allowed ACC to build up its investment fund. It was $11 billion; today it is over $25 billion. Those are State organisations backed by the Government backed by the State and they are providing the anchor-stone to this economy.The Government in office now could not do what it has done without the investments made the surpluses produced and the investment funds developed by the last Labour Government. That is the truth about the New Zealand economy today. It is in the shape that it is in and got through the global financial crisis because of the foundation—the firm foundation—laid by the last Labour Government which had a good coherent tax policy but more important had an Inland Revenue Department focused on tax collection tax gathering which is part of the platform of tax fairness. This Government does not care about tax fairness. It does not mind that large overseas-domiciled corporates get away with paying virtually nothing. They are happy to take our infrastructure happy to take our environment and happy to take our educated workforce but they do not want to pay their way and this Government thinks that that is OK. Well it is not OK. It is not OK and we need to make sure that we have a set of tax legislation some of the most complex and sophisticated that this House ever deals with that has as its underlying principle fairness—fairness to all taxpayers and fairness to all citizens as well.So when we look at this bill notwithstanding our support for it we want to know that this bill is part of a growing platform of fairness in tax policy and in taxation. I want to comment on a couple of aspects of it. One is about the employee provisions at least in so far as they relate to accommodation being provided for work to be done. It relates specifically to the growing requirement for the Christchurch rebuild to depend on people who come from outside Christchurch to do their work many of whom leave for the weekend and then come back—that is employer-supplied accommodation. The way this bill deals with that is to allow a tax concession or at least for it not to be regarded as an employee benefit and therefore subject to fringe benefit tax for a period of 2 years extendable to 3 years in the right conditions.I just want to make this point because the debate about employee benefits or at least benefits that employees get to enable them to do their job comes up periodically and the Inland Revenue Department has a funny sort of starting point in this day and age which is that it says that any provision to an employee that is related to doing their job—whether as in this case it is accommodation or in other cases it is a tool allowance or a meal allowance—is a private benefit. Well it is not a private benefit and that should not be the starting point. Once upon a time the starting point for the Inland Revenue Department would be that you are employed to do this job. You are working in unsociable conditions which is why you are being called to leave your regular home your family and the place where you have your roots and your connections to go to work in that location and you are being provided accommodation. There is no sense of private benefit in that at all just because you are getting a roof over your head a bed to sleep in and maybe a meal provided that does not make it a private benefit. You are there under the condition that you are an employee and you are fulfilling yourobligations to your employer. That is not a private benefit. That is fulfilment of your employment conditions.I hope that the Inland Revenue Department starts getting the lesson. It thinks that because you get these things provided by your employer somehow this is a private benefit. It is not. They are there on fulfilment of your employment obligations. Sure you might sign up to it. The nature of the labour market is that increasingly people in a more mobile workforce are prepared to travel longer distances and to spend time away from home many more nights a week away from home than perhaps was the case even 20 years ago. That is the nature of the labour market the dynamic labour market that I think even Paul Goldsmith referred to. But the quid pro quo for that is that when people are in employment arrangements that require them to be away from their home and away from their family the shelter that they get the roof over their head that they get the warm bed that they get to sleep in is not a private benefit. It is to enable them to do that job that the employer benefits from that the community in which that work is being done benefits from and that ultimately the New Zealand community benefits from. Let us stop seeing these things that are provided by employers to entice workers in to do work in different locations as somehow a private benefit. That should not be the starting point of the analysis. So we welcome the provision in this bill that allows there to be some tax concession for those people in the construction industry to be able to be accommodated to be given accommodation provision that is not then subject to taxation. That will be a benefit if not to the employee then certainly to the employer who would otherwise have to have paid that fringe benefit tax.The other point that I want to make too—and it really draws upon a point that my learned colleague Dr David Clark was making—is about the vast amount of uncollected taxation particularly amongst independent contractors. I want to make the point as well that this also reflects the nature of the labour market today in that a growing number of people are designated independent contractors but the reality is that a growing number of those independent contractors are given that status against their will not as part of their choice. In some cases they do not know it at all. I am dealing with a case of a worker who was employed as a conventional employee—that is what the employment agreement that he was employed under says—but when he was paid he was paid as an independent contractor. So the employer paid resident withholding tax but did not pay income tax as provided for under the income tax legislation as PAYE taxation. He has discovered after many months and having now received an invoice from the Inland Revenue Department that he is not the employee that he thought he was; he is an independent contractor. The employer has acted unscrupulously and I am now corresponding with both that employer the Inland Revenue Department and indeed ACC which was also the recipient of deductions—or has not been in this case. The deductions have not been deducted because this chap has been operating under an employment fraud for which there is only one party responsible and that is the employer.I suspect we will find that a significant chunk of that Inland Revenue Department debt against independent contractors will be against people who have not even known or do not even know that they are independent contractors and who are receiving invoices for taxes that they did not know that they were liable for. We need to address that issue as well. But it is good to see legislation that takes a sensible pragmatic and practical approach to these tax matters understanding that for a tax system to be credible and efficient it needs to have integrity as the basis upon which credible Governments in the First World such as we are and aspire to be have good tax systems underpinning them.