Nash Stuart: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — First ReadingText is incorporated into the Bound VolumeNash Stuart: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — First Reading[Sitting date: 08 December 2015. Volume:710;Page:8642. Text is incorporated into the Bound Volume.]STUART NASH (Labour—Napier): I must admit that the first sentence that the Minister Nicky Wagner made on the Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill was wrong and it is a real shame. The Minister said that this was a wide-ranging bill. Unfortunately it is not. It should be it could be and it actually needs to be but it is not. This is a bill that attempts to address three really important issues. However it just does not do particularly well—in a way that addresses the real issues or provides solutions to identified problems—and it could have. It just shows that the Government has sort of lost its track when it comes to tax.Let us start at the beginning. There are three issues this bill attempts to address as is pretty evident in the title. The first one is resident withholding tax. This is the third bill in a series of three bills that attempts to bring property speculators into the tax net. The problem with the bill as the Inland Revenue Department (IRD) itself has outlined is that the cost of implementing this system is $5 million and the amount of revenue that the IRD forecasts it will get out it is $5 million. It does not even come close to addressing the situation.Let me give you just a very small example of the scale of the problem we are dealing with. Last year alone the IRD captured about $65 million from taxpayers it believed were rorting the system through property speculation. That is just the IRD going after people when there is not even a brightline test in. The IRD knows we know and the Government knows that there is a real problem with property speculators not paying their fair share and the three bills that have come before the House—this is the last; the third bill—really just do not address the issue at all. It is a real shame because there was an opportunity—it is gone now—for the Government to really grab the bull by the horns in this sphere and show some real leadership in a way that I think the country is after. Certainly those in Auckland know the scale of the problem. But there has been a complete lack of leadership which is a real shame.In fact I sort of wonder—when Michael Woodhouse was told that he was going to be revenue Minister he was given a bit of a hospital pass actually because there has been a lazy Minister who has done very little in this space. I suspect that Michael will be a little bit better but I am certainly not holding my breath. But what Michael does have to contend with is an IRD system that is worth about $1.2 billion—do not worry about the $10 billion in the policing system.Dr David Clark: Opening up a can of worm farms.STUART NASH: Yeah absolutely mate—there are a number of worm farms there Dr Clark. The second issue is GST on online services. Let me give you a quote from the Minister of Revenue himself—the Minister for the next 5 days: “GST should apply to all consumption that occurs in New Zealand. This is what makes our GST system fair efficient and simple.” You know what? He is dead right. It should apply to everything but this legislation does not address the problem. The problem we have got at the moment is that if anyone buys something from a shop—from bricks and mortar—like a pair of jeans or a CD or anything like that there is 15 percent GST on that. That is fair. If you buy one of these items offshore there is no GST.It is our belief that what the Government should be trying to do at the least is just level that playing field—not give any sort of competitive advantage to those based offshore; just level the playing field. We are not saying that New Zealanders should not buy stuff online. It is their absolute right to. In fact it is what 21stcentury shopping is becoming more and more about. But what we should not have in this country is a system that actually penalises people who are setting up shop employing people paying rates and paying their taxes.All this legislation does is target offshore suppliers of things like music e-books etc. We are talking about companies like Apple Netflix and Microsoft but this is not where the real issue is. We are supporting this bill and we do think that if you are buying e-books and music and software online you should be paying GST. But the real issue is to do with buying things like you get in the retail sector because at the moment an offshore supplier has a 15 percent advantage from the get-go.This legislation applies only to companies that have $60000 per annum sales to New Zealand customers. That equates to around about $7800 in GST. It will bring in money—there is no doubt about that—but we think it should go a lot further. This has been an issue that has been on the table for a long time. We are still waiting for another discussion document but it has been 7 long years and the retail sector has signalled this to the Government and the Minister for a long long time.The third issue is the student loans one. I think everyone would agree that if a student borrows money interest free then they have entered into a form of social contract with the Government and they should pay that money back. We have no problem with that but this is not just about doing an agreement with Australia which is what this bill ratifies—a double agreement between Australia and New Zealand where New Zealanders who have taken out student loans and who are now living in Australia but are not paying back their student loans in any way shape or form will be brought into the net. The agreement is vice versa as well so when there are Australian students who have taken out student loans—and they have a similar system to ours—if they are living in New Zealand and they are not paying back their student loans then they will be forced to as well.But the problem is actually worldwide. We should be doing these sorts of agreements with the British Isles or the United States for example. What we should actually do is capture students who have taken advantage of the opportunities that we have provided them through education with the interest-free student loans and bring them all back into the net but as it stands we are just going after those in Australia.In conclusion this is a bill that could have been bold. It is a bill that addresses three issues that are widely known within this Parliament and certainly within society. The first is bringing speculators into the tax net. We think it could have gone a lot further and it has not. The second issue is GST on online goods and services and we believe it should have captured the retail sector. It could have brought in a lot more and it could have levelled the playing field but it has not. The third issue is student loans. The bill goes part of the way but it does not address the real issue.There are three issues here that the Government could have gone hard on could have shown real leadership on and you know what? We would have supported it on those. We would have supported it. We are supporting this bill. We look forward to it going to the select committee and to having the experts come in and tell us how things really really should be in terms of building robust legislation. But unfortunately we are left with a missed opportunity. We will support this bill but I just want to reiterate that it is a missed opportunity. Thank you very much.