Robertson Grant: Taxation (Transformation: First Phase Simplification and Other Measures) Bill — Second ReadingText is incorporated into the Bound VolumeRobertson Grant: Taxation (Transformation: First Phase Simplification and Other Measures) Bill — Second Reading[Sitting date: 12 April 2016. Volume:713;Page:10422. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): It is a pleasure to take a call on the Taxation (Transformation: First Phase Simplification and Other Measures) Bill and let us start out at the beginning. There is a problem with this bill in that the word “Transformation” is having the loosest ever possible meaning given to it in the history of the English language because there is very little about this bill that could be described as transformative.If one were introducing a transformative taxation bill it would rebalance taxation between hard-working PAYE earners and those who speculate in the property market. Or you would be transforming our taxation to create New Zealand as the taxation regime that the rest of the world looks at and says: “That is the highest standard of ethics right there and then—no loopholes for foreign trusts.” That would be transformative for the taxation system. Or it would be a taxation bill that finally said that we will ensure that multinational companies pay their fair share of tax in New Zealand and that hard-working wage and salary earners can rest assured that they are doing their bit and so are the other taxpayers. That would a transformative taxation bill. But that is not what is in front of us here today.This bill is utterly misnamed and once again the Government has complacently brought forward a piece of tax legislation without actually taking the time to think about what it could do right now today to help New Zealand grow a productive economy to ensure that people paid their fair share and to ensure that people are given a fair go. That is what tax legislation should be about when it comes to this House but unfortunately that is not what is in front of us.What is in front of us is a series of minor amendments to a range of bills: the Income Tax Act the Tax Administration Act the Goods and Services Tax Act the KiwiSaver Act the Child Support Act the Student Loan Scheme Act—which we amended just a moment ago—the Gaming Duties Act and the Accident Compensation Act. Some of the changes here are linked to the new and improved forms of communication of the Inland Revenue Department (IRD). That occupied a lot of the time of the Finance and Expenditure Committee—discussing the way in which technology could now be used for the IRD to communicate with taxpayers.As a general rule those of us on the Labour Party side of the House want to see that technology used and used efficiently and effectively. Although there will always be a need for rules around that it did become a little frustratingfor me in the select committee as we got into the real nitty-gritty of electronic signatures—were they safe and could we actually make use of email as a formal means of communication? Of course we can. As I said although we have to step our way through that appropriately it is important. And fair dos to the IRD. That was what it brought the bill to the committee to do—to move away from paper-based services and towards more digital services.As I said there were references in legislation to things being sent by post and at the risk of upsetting my former colleague Sir Michael Cullen not that many people are doing that any longer. So—Hon Ruth Dyson: I think he knows that.GRANT ROBERTSON: He has worked it out? Yes. So therefore the phrase “by post” has been replaced with phrases like “by writing”.This will appeal to some of my colleagues—particularly actually I am thinking here of my former colleague Maryan Street. We debated a three-tiered approach to the way in which the IRD seeks communications out from taxpayers. There were three tiers of verbs and we did have quite some debate in the select committee about the hierarchy of verbs. I can see that Mr Deputy Speaker knows that he missed out here—he missed out on this conversation. We do have a three-tiered approach with the use of verbs: to ask request or inform; to apply or notify; and to formally notify. So when the IRD is asking for things we now have a tiered approach to the way in which it asks requests or informs; applies or notifies; and then formally notifies. So these changes are big news in the world of taxation. We now have some clear and perhaps more modern language involved in that.As I said earlier electronic signatures were a particular topic of debate. We have now provided for documents such as tax returns to be filed under an electronic signature so it is easy for—I do not know—busy people like the Prime Minister. When the Prime Minister is doing a tax return the Prime Minister could apply an electronic signature to that. I think that on this side of the House we would be more than happy to take his tax returns with an electronic signature you know because we are not fussy about the form in which the Prime Minister’s tax returns find their way into the public arena. If he wants to be transparent and if he wants to be open to this then we would be more than happy to see an electronic signature - based return and that is now possible under this piece of legislation.I do want to spend a couple of minutes talking about an issue that I did not think would take the select committee very much time but amazingly enough it did—that is the question of secrecy in a co-location environment. The IRD is now co-located in a number of centres in New Zealand with other Government agencies and when they are together there are all kinds of efficiencies for the consumers and for citizens to be able to visit and work with Government agencies. We had a long discussion about whether there were adequate secrecy provisions in place for both IRD employees and employees of other Government agencies that were working in a co-located environment.In the end I was sounding a little bit cynical when I introduced this part of my speech but actually this is a serious matter. The IRD deals with the sensitive information of all New Zealand taxpayers and in a co-located environment it is possible that someone takes something to the photocopier they put it on the photocopier they get interrupted something happens and they leave a page behind. Under the secrecy requirements that are currently placed on IRD staff if another IRD staff member was to walk up and pick up the piece of paper they would be covered by the same rules. If you then look into having a co-located environment you might have as an example a staff member from the Ministry of Social Development or ACC or something like that who is co-located but is not governed by the same secrecy provisions as the IRD staff member.We had a long discussion in the committee about how we would deal with this. In the end we upped the requirement on IRD staff to be aware of their own secrecy provisions. They have to have a higher duty of care essentially when they are working in that co-located environment and there are some amendments that have been made by the committee to enable that.There were some good discussions—and this is a good element of the bill—around how we can help support employees who have the possibility of share purchasing within the firms that they work for. The benefits to employees under share purchasing agreements have not always been clear to people and have not always been easily identified and as part of an IRD discussion process on this the amendments in the bill allow the treatment of the amount of benefit from a share purchase agreement as extra pay and allow employers to choose to withhold tax on the value and would require the employer—whether choosing to withhold or not—to disclose the value received via a monthly schedule. So it is just making more transparent and more open the way in which employee share schemes operate. They are now a much more common part of people’s remuneration and it is important for the IRD’s processes and policies to keep up with that.More broadly there was a range of changes around information sharing which continues to be a very important part of what the IRD does. Also around KiwiSaver there are a series of changes there to ensure that the rules are clear for everyone. One that again attracted a lot of attention was around minors—that is minors with an “o” Mr Deputy Speaker not miners with an “e”—who join KiwiSaver when they are signed up by their parents and perhaps they have been incorrectly enrolled in a scheme. They have until their 19th birthday to opt out. Members who choose to opt out would receive their employee contributions but not their member tax credits kick-start contribution or their employer’s compulsory contributions.We did ask officials whether this was a major problem in that there were armies of young people being signed up to KiwiSaver unwillingly and then being desperate to get themselves out. There are not but obviously where the situation exists that people when they turn 18 want to remove themselves from KiwiSaver—we hope that they do not but should they choose to—that provision is being put in place.It is a bill that completely fails on its own title—it is not transformative at all. It could have just been called the “Taxation and Other Measures Bill” and you would be accurate. But I think what the events of the last couple of weeks have highlighted on this side of the House is that legislation like this is missing the point when it comes to taxation. We need a tax system in New Zealand that the average working person can be confident in and when they make their contributions and do their fair share they know that others are doing the same. We do not have that in New Zealand at the moment. We have a system where large multinational companies are not paying their fair—