McClay Todd: Land Transfer Amendment Bill Tax Administration Amendment Bill — Third ReadingsText is incorporated into the Bound VolumeMcClay Todd: Land Transfer Amendment Bill Tax Administration Amendment Bill — Third Readings[Sitting date: 10 September 2015. Volume:708;Page:6559. Text is incorporated into the Bound Volume.]Hon TODD McCLAY (Minister of Revenue): That bit of information that you gave us then Mr Assistant Speaker that people outside of the House cannot hear this information as well as they need to will actually help the Labour Party because that last speech from Mr Twyford was atrocious. He spent his whole time saying that Labour members are not interested in race—that was the first 5 minutes of his speech. The other 5 minutes of his speech was purely about Chinese people. Mr Twyford cannot on the one hand say that Labour members are not interested in race-based policies when it comes to this issue when he is the man who released a list of names that are just Chinese-sounding. In the other half of his speech he talked about Chinese people and Chinese investors.I would say that this is a very important piece of legislation and it is good legislation. It is well-thought-out legislation. Before it was brought to the House it went through full public consultation. But more important when it comes to tax policy in this country we have a very long process and precedent in place where we engage with the tax advisory community before we bring legislation forward so that we can seek their views. They give us input and they do so freely and willingly. These are tax experts in New Zealand who come from all parts of the world. We are interested in good tax policy and we are interested in the assistance they give us. We are not interested in where they have come from unlike Mr Twyford in everything he says when it comes to housing in Auckland and New Zealand.So this legislation was brought to the House well-thought-out. It does a number of things. We have an expectation on this side of the House that where tax is owed people should pay it. But we also want to make sure that it is easy to pay tax and that the Inland Revenue Department can use the resources the scarce resources we give it on behalf of the taxpayer to target those who choose not to pay tax. We do not want to burden everyday New Zealanders who meet their obligations.This legislation is one of three measures announced around the time of the Budget by our Prime Minister. The first is the collection of IRD numbers when a property transaction takes place. I will come to that in a moment. The second is the brightline test which has gone through the House this week that will clarify a tax obligation. These two pieces of legislation go hand in hand. If you take only one of them you are seeing only half of the picture. It is very important to look at the two together. The third is a withholding regime upon overseas people when they sell a property and they have made a gain—and more legislation will come to the House; we are consulting on that at the moment—whereby some of that gain will be withheld in lieu of their tax obligation.So in this piece of legislation everybody but those who have a principal residence in New Zealand must provide their IRD number when they purchase a property. That is the first thing. The second thing is that if they are an overseas person they must get an IRD number before a transaction can go through. As of 1 October of this year they must have a New Zealand bank account before they can get that IRD number and for that New Zealand bank account to be given to them they have to go through the suite of anti - money-laundering legislation that is in place in New Zealand and that the banks have an obligation to enforce.That overseas person must also give the equivalent of their tax number from the tax jurisdiction they are based in. So if they are in Australia or London or Fiji or for the purposes of Mr Twyford if they are in Beijing in China they must provide us with that information. The reason for that is that—actually as with anybody who has a tax obligation in New Zealand—we expect them to pay their fair share of tax. We also have arrangements in place with a number of countries in the world where they should be paying tax. This information that we collect will be able to be shared with that overseas tax jurisdiction to make sure they are paying their fair share of tax.The one exception to that—and I know that earlier in the debate in other stages this was an issue of some contention at least for the Opposition—is that there is a group of New Zealanders who will not have to provide their IRD number. They are the people who are buying a principal residence—their own home their own residence where they themselves live or in many cases live with their family.The brightline test imposes no tax obligation upon those New Zealanders. So I would challenge members of the Opposition and say that actually we would be burdening them for no reason with providing an IRD number when there is no tax obligation as a consequence of the purchase and sale of that property. Under the brightline test if you purchase a principal residence and you sell it within 2 years irrespective of a gain there is no tax consequence. So why is the Opposition saying we should collect information from these New Zealanders when they will not face a tax obligation? Should we collect information on them upon taxi rides even though they do not pay any tax personally? Why would we do that? It does not make sense.But what we have done for that very small group of people who may look to avoid their tax obligation is given tens of millions of dollars to the Inland Revenue Department to enforce compliance around property tax. They will be very good at that. In fact as we go back the last Government towards the end of the Labour Government started this by giving the department some money. Back then they must have had some concerns not about Mr Twyford’s concerns—Chinese people buying and selling property in New Zealand—but about people meeting a tax obligation they have. They started it back then. We are continuing with this so that the Inland Revenue Department can focus on those who are not meeting their obligation. Target them and leave alone all the other law-abiding citizens of New Zealand who have no tax obligation when they purchase a principal residence—leave them alone.To other members of the House who say that we should actually just collect that information well some would argue that but I do not because I actually trust New Zealanders to meet their obligation to the tax department. But where they do not we are giving the Inland Revenue Department resources to focus on that.The final thing I would say to you Mr Assistant Speaker is that I agree with Mr Twyford at least to the degree that I could sense he might have been genuine. This is not about race. It is not actually about where people come from. This is good tax policy. It is about people paying the tax that is due in New Zealand under the tax laws that are set in New Zealand. We do that so that the Government can afford to provide the many services New Zealanders demand and deserve. I would say to Mr Twyford that it is not good enough just to say that it is not about race and then only talk about one race all of the time. Others outside of here—if the sound has come back on—will judge him for that. This is good tax policy and I am proud to recommend it to the House.