Clark David: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Second ReadingText is incorporated into the Bound VolumeClark David: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Second Reading[Sitting date: 31 March 2016. Volume:712;Page:10134. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): This bill is one that contains a number of sensible enough changes and we will be supporting it in the House. It does get on with some amendments that are required to make sure that our tax law maintains its status as being broad based - low rate and that general approach to taxation has served us well over many many years.Of course on this side of the House we will see another opportunity to make the tax system fairer and more productive overall fall past because there are a lot of things that are not in this bill that could be in this bill. There could be attempts to stop the distortions we have in our economy that see people speculating in the housing market rather than investing in the productive sector. There could be a number of other measures but I want to speak mainly—the Assistant Speaker will be pleased to hear—about what is in this bill. That includes a number of changes to the student loan area. The problem is evident. When people repay their student loans they should feel good about that. They should not feel jealous of others who run overseas and flout the law. That does happen. I have certainly heard of instances where people have thumbed their nose at authorities and said that if you are living overseas and you can get away with it you should be able to get away with it. Frankly I do not think that cuts the mustard. I think that people who borrow against a scheme with a certain set of conditions should be expected to repay their loan so I want to take perhaps a slightly more positive tone and congratulate the Government on making some small steps in that direction.The suggestion of information sharing with the Australian tax authorities sounds sensible enough to me and also the change where it is required now that instead of formal notification the Inland Revenue Department will accept notification in writing—it is logical. We have moved on from the days when you had to have a carrier pigeon or a royal herald deliver a letter and there is a definition around “formally notifying” that makes it complex currently for an email to suffice as a communication. These kinds of updates are sensible; we should welcome them. They are common sense when we are now accepting that an email is a legitimate form of communication.Other recommendations in the bill—and I was going through a number of them—are about clarification. They are ones where the bill is simply making sure that there are not either loopholes or misunderstandings and there are a large number in the area of student loan legislation that are proposed. For anybody watching at home the first portion of this explanatory document—The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!Dr DAVID CLARK: —is devoted to that particular task of making sure that the law is clear for people to understand. That is a good thing and it should be affirmed.The issue of GST is also raised in the bill and GST on online purchases is tackled in a minor way. The Government has been tepid on this to say the least. When I was the tax spokesperson a couple of years ago there was a process set up to come to a view on this. It was pushed out past the election in order to avoid any controversy. The Government certainly could not be accused of leading on this issue. It could not be accused of leading on many issues actually except for maybe in the area of payroll debacles at the moment. Generally it ducks for cover. It is a Government that seems to like managing decline rather than having bright new ideas. In this instance it is allowing for GST to be collected on downloads and that is a step in the right direction. It of course does not address the issue that many retailers in New Zealand have that purchases—you know if you buy a $50 pair of sneakers or a book from overseas it does not attract GST. This does nothing to change that so this bill does not tackle the issue that really is confronting retailers in New Zealand. I think retailers across the country will be very disappointed that after so many promises and such a long process with soft noises from the Government the issue has not been tackled. We will see retailers continue to struggle against offshore competitors that do not pay tax in New Zealand and do not have that additional charge required to capture that tax applied to them.That GST issue is an issue that could and should be dealt with and it is good to see the Government sticking a tepid toe in the water to address it. It is good to see those tidy-ups on the Student Loan Scheme Act. But overall as I say the Government is dragging its feet. This GST on products issue has been around for a very long time and it is another example in my mind of this Government tilting the field away from small business. Those people who risk their shirts every day who have a second mortgage on their house to try to get a retail business off the ground are disadvantaged by the tax law as it stands. This Government seems to have it in for small business in my view. There have been fewer small businesses created on an annualised basis under this Government than under the previous Government. It has introduced legislation that requires employers to collect overdue child support earnings. That is a burden on a small business owner when they know the personal details of their employees that they otherwise would not have known. The Government has introduced a lot of red tape for small business. Here we have again an opportunity to level the playing field that it has not taken. So small business again is disadvantaged against the multinationals which will avoid paying tax on the items that small businesses must pay tax on when they sell them in New Zealand shops.But we should not be too surprised. This measure is the best that the Government can come up with despite being in its eighth year of Government. It is too little too late. But as I said we will support it because it is a step—albeit a small one—in the right direction. We just think that small businesses in New Zealand deserve better. They do deserve better. There are not many Kiwi companies—and I think that others have touched on this—that are competing with iTunes or Netflix. The issue that the Government is tackling is not one that is facing many New Zealand businesses right now. The issue that is facing most New Zealand businesses has not been tackled in this legislation. The family-run businesses in the main street—they are the ones that are going to continue to be disadvantaged by the un-level playing field that National maintains.This Government does seem to have an aversion to doing the difficult things. It certainly is letting the Kiwi Dream slip. Homeownership—we now have the lowest homeownership rates in New Zealand since 1951. It does not seem willing to tackle the big issues. It seems prepared to fill up the odd gap here and there in this legislation but not to take on the really big issues of what a fairer tax system would look like overall.What would a system look like that ensured everybody paid their fair share of tax not just hard-working middle New Zealanders who go to work every day and those who take the risks and own a small business? The Government does not seem willing to tackle those issues that would ensure that New Zealanders had a growing prosperity rather than—as we have seen—an almost zero increase in real terms in wages across the country. The only increase in our GDP in the last year we have learnt in recent days has been as a result of immigration. There has been no increase in terms of wages in New Zealand. That is a sad reality and it will not change if we do not take on these bigger issues.As I have said we will support the bill itself. We will support the small changes that are fingers in the dyke I guess of the current system because it would be worse without them but it is hard to be inspired by the kind of legislation we are debating here on a Thursday which bears the title Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill. It is the small stuff and this Government seems to be focused on the small stuff. I hope that it can do better. I wish that it would lift its aspirations and look to create the Kiwi Dream like a future Labour Government will do.