Connell Brian: Income Tax Bill — Instruction to Committee In Committee Third Reading 
Connell Brian: Income Tax Bill — Instruction to Committee In Committee Third Reading 
[Volume:616;Page:12087] 
BRIAN CONNELL (National—Rakaia) 
: 
 I am exhausted just looking at this bill let alone reading it. I have to admit that I did not have the strength to carry it all down here—2307 pages of it—but I was compelled by Mr Hide’s argument so I looked at the page and Mr Carter has also brought it to our attention as well. Mr Hide said the rate of tax for Maori authorities was 19.5 percent which is a flat rate. I thought that was a pretty good idea. If Mr Hide said it I thought that was good enough. Then Mr Carter said it and I thought I had better look for myself. So I went to page 2026 and looked at Maori authorities in Part A “Income tax” of schedule 1 and I do not know what the debate is about. I do not know why Mr Duynhoven is calling out because clause 2 states—and I will read it for Mr Duynhoven and others; it is quite clear—“Maori authorities. The basic rate of income tax for the taxable income of a Maori authority is …” 
Rodney Hide 
: 19.5. 
BRIAN CONNELL 
: Thank you. Mr Duynhoven also confirms it so he knew about it all the time. So he concurs. The provision continues: “… 19.5c for every $1 of that taxable income.” 
This legislation really is an epic. I was looking through some of the background notes before I came here and I see that not only is it a huge undertaking but it started with a rewriting of the Income Tax Act of 1976 and the first component was finished in 1994. I assume that was under a National Government. 
Hon Harry Duynhoven 
: So was 1976. 
BRIAN CONNELL 
: I thank Mr Duynhoven because he has just called out what I was going to go on to say. The second stage was completed in 1996 but— 
Hon David Carter 
: Good days—they were good days. They’ll come again. 
BRIAN CONNELL 
: They were good days but in the intervening time it has not been done. Now we are getting to the third stage and hopefully we will try to bring it to a conclusion. 
I congratulate the Labour Government on introducing legislation that will have a flat tax of 19.5 percent provided it applies to everybody. The Minister might want to take a call and clarify that point. I am sure that is what he meant when he shook his head in acknowledgment saying it would be for everybody. 
Hon David Carter 
: The Minister’s agreeing with it. 
BRIAN CONNELL 
: He is agreeing with it. I think that would be an outstanding outcome. 
Hon David Carter 
: An amendment should be made. Move an amendment! 
BRIAN CONNELL 
: Oh no—the Minister can clarify that. I will not need to. 
I go on now to see that the key aim of the rewrite of the project is to produce tax legislation that is clear uses plain language and is structurally consistent. That sounds pretty good; I concur with that. I do not think there is much argument in the Committee about that: our tax legislation and the wording around tax is extremely confusing. It is so confusing that a huge number of people become non-compliant because they are either ignorant of our tax laws or they simply do not understand them. What this creates is an industry for lawyers and accountants to work a vortex system where a lot of activity is going on in a sub-economy which is not growing this economy for the folk of New Zealand. 
In framing this legislation I also see the Government saying that it has been involved in public consultation. If that were the actuality of this Government’s process then I say that that is sensible and timely but I have severe doubts about this Government’s commitment to consultation. It says it consults but the reality is that in most cases it is found wanting. I have found press release after press release from business community interests saying that this Government has not consulted them when it says it has. 
I see that the bill rewrites Parts C D and E and aspects of Parts A and B and I have a genuine question for the Minister as the commentary states it “re-enacts” but does not “rewrite” the remainder of the Act. I really do not understand what that means. Maybe the Minister in the chair could take a call and explain to us exactly what he means by that. I just find that a little confusing. 
I notice that the Act will come into force on 1 April 2004 and I hope that is not an April Fool’s Day joke. If the Minister says it will happen on 1 April I believe it will. The bill applies to income derived in the 2004-05 tax year and in later tax years or in the corresponding period. The explanatory note goes on to state: “Care has been taken in the development of the bill to ensure that it has the same outcomes as the current Act.” This is a very important issue.