McNair Craig: Income Tax Bill — Second Reading 
McNair Craig: Income Tax Bill — Second Reading 
[Volume:616;Page:11793] 
CRAIG McNAIR (NZ First) 
: 
 In speaking to the Income Tax Bill I want to say firstly that I picked up volume 1 while the Minister of Finance was speaking and he pointed out that I had only picked up half the bill. As I have stopped going to the gym as often these days this is all I am able to pick up because it is such a big bill. It is something like 2000 pages long. We are talking about a bill that is supposed to simplify the tax law and I would have to question whether a bill of 2000 pages is really simplifying it. Tax law is hugely complex and that is why we have to start the whole process over again and start the rewrite as the Minister said. To expand a little on that the bill represents the third stage in the process of rewriting the income tax legislation. It follows the reordering and renumbering of the Income Tax Act 1976 and its enactment as the Income Tax Act 1994 and the rewrite of the core provisions contained in Parts A and B of the Act. 
In the Finance and Expenditure Committee we felt there were some submissions that would enhance the bill. I want to share with the House some of the submissions that were important to me and that I am very happy to see accepted and taken on board. One of the submissions I want to talk about—and obviously there were a huge number of them—came from PricewaterhouseCoopers. They thought the date of application of the bill should be deferred for 1 year to apply to the 2005-06 tax year or corresponding income year. Taxpayers with early balance dates will have insufficient notice of the new Act and could be disadvantaged compared with taxpayers with standard or late balance dates. Officials did not oppose this submission for deferring the application date. However deferring this date would mean there would be a longer period within which future amendments to the 1994 Act and the rewritten Act would use different styles and language. However officials do not consider this concern outweighs the suggested benefits for readers of the Act of deferring the application date and I am very happy that the submission was passed. 
With regard to enhancing the entire tax system some members—such as the associate finance spokesperson for the National Party John Key—have talked about doing this and their solution is cutting tax rates. I want to encourage the Government to implement a tax abatement scheme and concessions for our exporters to ensure that viable exporting opportunities and innovation are not lost—for example a 20 percent tax rate on new export net income. I heard the National Party spokesperson talking for most of his speech about tax cuts and all one hears is tax cuts tax cuts. Basically the interpretation of that is “tax cuts for the wealthy” and that is pretty much all one hears from that party and that spokesperson. 
John Key 
: Do you think you’re wealthy if you earn under $38000 because that’s what we were talking about yesterday. 
CRAIG McNAIR 
: The point I am trying to get to is the fact that the National Party and that spokesperson do not think outside the square. They do not think outside the box. All one hears from them day in and day out is: “Tax cuts for the rich.” 
As the only true centre party in this Parliament New Zealand First wants to propose something new and different. We want to think outside the square and outside the box and create tax incentives for exporters. I want to talk about this only briefly because I do understand we are talking about the Income Tax Bill but briefly our exports per capita clearly show New Zealand $3000 Ireland $19000 Singapore $34000—and right there that shows that we have to do something about this. This is not just about giving tax cuts to the rich but saying: “Let’s think outside the square and start giving tax incentives to the engine room of this economy.”—our export sector. 
I listened to the National Party spokesperson and he talked about doing something for the Kiwi battlers the Kiwi farmers and so on who are being hurt by this high export dollar. I ask what did the National Party do for exporters back in 1996. 
Government Member 
: Nothing! 
CRAIG McNAIR 
: It did absolutely nothing. I remember that the exchange rate back in 1996-97 was at around US70c and the National Government did absolutely nothing. It took New Zealand First to get into coalition and do something to start to bring the dollar down. This is the only party on this side of the Chamber that means what it says and says what it means. 
John Key 
: What did Winston Peters do when he was Treasurer? 
CRAIG McNAIR 
: We started to bring the dollar down. 
John Key 
: No you didn’t. 
CRAIG McNAIR 
: Yes we did. We set in place a policy targets agreement that would bring the New Zealand dollar down. What did it do? It brought it down. For somebody who has been in the foreign exchange market to not even understand that is absolutely crazy and I cannot understand it. It must be hard for the old National Party Kiwi battlers who—as Darren Hughes said—are down to their last three Jaguars. It must be hard and I feel for them. 
I want to get back to some of the intricate details of the bill and I want to focus on a couple of other submissions that were made to our committee. Some of them were very interesting and very helpful. I want to bring to the Committee’s attention one of the submissions of the Institute of Chartered Accountants of New Zealand on clause CB 1. The institute felt that the clause should be repealed to make it clear that an amount derived from a business does not include a capital amount. This submission codifies case law and makes explicit the treatment of capital gains derived by a business. This addresses the concern expressed in other submissions that this clause in the rewritten Act could be interpreted as including capital gains. That submission was accepted. So I wanted to raise a couple of submissions that were taken on board by the committee which I believe has enhanced the bill. 
With regard to tax law I believe it will always be a never-ending moving ship and will have to be constantly looked at in that respect. I am glad I have been able to be part of a select committee representing the New Zealand First Party along with my leader the Rt Hon Winston Peters in making sure we are able to simplify the tax law in this respect.