Carter John: Income Tax Bill — Second Reading 
Carter John: Income Tax Bill — Second Reading 
[Volume:616;Page:11800] 
JOHN CARTER (National—Northland) 
: 
 I want to start off by telling the House that I have not read the bill. 
Darren Hughes 
: Have or haven’t? 
JOHN CARTER 
: I have not read it for a couple of obvious reasons: for a start off it is in two volumes and it is in English. That is a bit of a negative. Secondly I do not in any way intend to pass myself off as a tax expert. Indeed I think it is probably accepted that I am not known for my knowledge in financial matters. So I just get those two things out in the open to save anyone from trying to poke the finger at me. 
There are a couple of fundamental issues I want to raise with regard to this rewrite. First it is important that we do our best as a Parliament to bring together legislation that has been amended over a number of years for those who are significantly involved. Obviously there are a lot of tax consultants and accountants who use this sort of legislation repeatedly and who from time to time miss little bits that then cause them problems with the Inland Revenue Department. 
I want to make some comments on some fundamental issues relating to legislation of this sort. The first thing I will put on the record is that I often hear people say: “Well I haven’t paid any tax this year.” or “I don’t pay tax.” Anybody who thinks that he or she does not pay tax in one way or another is dreaming because tax is a cost in our society and anything we do where a tax is implied means that tax somehow or other gets wound up in the goods we purchase or use. If people suggest they are the lucky ones and do not make some contribution to the taxation system in this country then they are deluding themselves. The fact is that tax is a built-in cost in our society and we all pay it in some form or another. When we buy goods or purchase services there will be a tax component in it that we contribute to. So the first fundamental point we need to understand is that tax is a cost in our society and quite honestly every Government should be doing its best to ensure it reduces the cost and burden on our society. 
The second thing that interests me with tax law is that people who are tax experts are always looking for ways in which they can gather revenue. I saw it more with local government with which I am more familiar than with central government finances but the same principle applies. There are people who—if they happen to be the treasurers of local government or whoever they may be—are always thinking about what they can do to gather more revenue. They think that by putting a certain rate across or by applying a tax somewhere more revenue will be brought in. That is fine but we need to go back a step and ask why they need the revenue in the first place. That seems to me to be an absolute fundamental with regard to any system of revenue collection. 
Quite honestly I do not think that enough time is spent on asking ourselves the very fundamental question of why we need the revenue in the first place. If our system of delivering services to the people of this country were more efficient—and I am now talking about our bureaucracy in particular—the Government would not need the same level of income to provide them. After all it is the people themselves who pay for and then receive those services. They are the people who not only pay but also are the recipients. We should constantly be looking to see why we need that level of income. Do we need to provide the services that we do provide? 
That leads me to one other observation. I am becoming increasingly concerned about the mindset in our bureaucracy. Once upon a time we had an absolutely dedicated loyal public service in this country. I am afraid to say that today it is not so in my view. Things are happening in our public service that worry me. We have seen signs of corruption coming through in particular cases. Also the public service used to be apolitical but I am afraid we cannot say that today. As a consequence because of those two aspects that never used to be there the public service is not what it was. 
Pita Paraone 
: It started during the wine-box inquiry. 
JOHN CARTER 
: There are a whole number of instances where one could say that the attitude in the public service has changed one of which my colleague has just pointed out. The price of that is extra cost. The price of that is the need for a volume of tax law because more cost is added and we need to see whether we can attract more revenue. 
One of the things we should be looking at with regard to law like this is how we can simplify the way we gather revenue. I will give an extreme example of what I mean because I do not think there is anybody in New Zealand who would not say that legislation like this is hugely complicated. It is an example of extreme simplification because I know there are people who believe that a flat tax system is a way in which we could attract revenue and that it would be a lot more efficient than the system we have now. Instead of having a system of income tax of GST of road tax and of all the systems we have what would happen if we had a system that taxed one good at source? An example would be if all Government revenue were gathered only from diesel and petrol. Believe it or not I had the calculation made to do away with all other systems of income for the Government other than applying a levy on fuel. The problem is that it becomes a bit extreme because the cost of the fuel is quite excessive. It is not so much the fuel itself but the tax applied on it by the Government. 
The last time I did the calculation I figured we would need to be paying about $18 a litre at the pump for petrol in order to gather enough revenue to replace all the other income that everybody else pays. Although obviously that would not work because it would cause a few distortions in the system we have the point of collection would become so much easier: once a month the petrol companies would write out a cheque to the Government for whatever the revenue was and we would not need this complicated law or a whole lot of people making tax calculations for other people. It would simplify the tax system overnight. The advantages to our country in getting rid of all that structure and bureaucracy would be huge. The problem would be in getting such a system implemented and accepted so that people understood that they would not be paying GST or income tax or any other form of tax. However it would cause them some concern the first time they turned up at the petrol station to fill up their car and found that they had a bill of about $250. So although it is probably not practical to implement such a system the point I am making is that we should continue to endeavour to ask ourselves whether we need the income and how we can simplify it. 
I will finish my comments on one other point that I think is important. We have a system where we talk about tax changes and all parties will have a different view. One of the things that disturbs me is that as we go through the debate and the discussion—and in the last 2 days the National Party leader Don Brash has given the National Party’s view on taxation as we go into the next election—we find that unfortunately comments from the Prime Minister tend to distort what she claims will be the impact. The fact is that this country has a huge surplus of $5.5 billion at the moment and that will undoubtedly be used by the Minister of Finance in the next election to try to spread the load and encourage people to continue supporting the Government. 
 I heard the Prime Minister the other day say that if Don Brash’s policy were to be implemented it would have a negative impact on health and mean that we would have to decrease funding in education and other areas. That is absolute garbage. It is rubbish. Quite honestly it is irresponsible for the Prime Minister or anyone else to suggest that we do not have sufficient opportunity to look at our tax levels and at whether we can encourage further investment and involvement in employment through the private sector without the Government having to be so involved. 
I come back to this legislation and I say that it is great that the Government is doing it. We have been supportive of it; nevertheless there are some fundamental things that we should be looking at as we do these rewrites. We should be looking to see whether we can change the principles we work on and have less complication in our tax laws.