Hipkins Chris: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
Text is incorporated into the Bound Volume 
Hipkins Chris: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
[Sitting date: 18 September 2012. Volume:684;Page:5331. Text is incorporated into the Bound Volume.] 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I am very happy to take a call on Part 3 of the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill. This is the part of the bill that is about the electronic filing of tax returns or the electronic filing of information. I think that that is a great thing. I file my tax return electronically each year. My accountant prepares it for me but I have to sign it. Before he files it electronically for me I have to sign it and I can tell every member in this House that I actually read it before I sign it. So the accountant may prepare it for me and put all the information together about my income and expenditure and so on but before I sign it and before it is submitted by him electronically I read it and I make sure that all the information in it is absolutely correct. 
I think that it is no unreasonable thing for the Inland Revenue Department to ask New Zealanders to read their tax returns before they are filed electronically. I think that is very reasonable. New Zealanders know that if they provide wrong information deliberately to the Inland Revenue Department the department will come and find them. I tell you that if there is one agency of Government that somebody does not want to be investigated by it is the Inland Revenue Department. Anybody who has been investigated by the Inland Revenue Department—I have the pleasure of saying I have not been one of them—will say that it is a most unpleasant experience to have the department investigating— 
Maggie Barry 
: That’s the whole idea. 
CHRIS HIPKINS 
: “That’s the whole idea.” says Maggie Barry. I agree because people when they are filling out forms and signing them should make sure they are correct except this Government thinks that that rule applies to everyone else but not to it. The Prime Minister this week has said that it is OK for a Minister to sign a return without reading it and knowing that the information in it is false. If somebody did that with their tax return and knowingly filed it electronically and according to the provisions of this piece of legislation the Inland Revenue Department would be all over them. The Inland Revenue Department would not let go. The Inland Revenue Department quite rightly would be all over them. It would go through all of their financial affairs because it can do that. But the Government’s message to New Zealanders is that “That is the standard we expect you to adhere to but we have got a different one for ourselves.” That is the rule according to this National Government. It is absolutely and fundamentally wrong. 
Let us talk through what that means. If somebody is earning for example money in cash and somebody gives them an envelope a brown envelope at a meeting over lunch with a cheque in it for let us say 15000 bucks—so somebody gets 15000 bucks—are they obliged to declare that as their income when they file their tax return? Actually yes I suspect they would be required to declare that when they file their tax return. If they knowingly filed a return that contained false information about the $15000 they received in an envelope while they were having their lunch they would be done for. The Inland Revenue Department would be all over them. But actually the Government—John Key—says that is OK providing nobody prosecutes anybody. Well actually if New Zealanders took $15000 in income and knowingly filed incorrectly with the Inland Revenue Department about that income the Government would be all over them. The Inland Revenue Department the Government’s agent would be all over them. What this Government is saying is that that is the rule for everybody else but not for it. 
The point that my colleague David Clark raised earlier on about the electronic filing system is a very legitimate one. If the Government is going to implement an electronic filing system we need to make sure that it is going to work and that it is going to be robust but also that people who are using it will get the support they need to get. Electronic filing systems do not always work. There can be difficulties with an internet-based system and somebody when they are doing these electronic returns needs to be able to pick up the phone now and then and talk to somebody particularly given that the penalties for getting it wrong are quite high. For somebody filing information with the Inland Revenue Department that is wrong the penalties are quite high. They need to be able to pick up the phone talk to somebody and make sure that they can get it right. If there are a million calls a year where people give up before they even get through to somebody at the Inland Revenue Department that would suggest that the system is not working well. 
Transferring a whole lot of the administrative burden from a call centre to an internet-based system does not necessarily resolve the problem. You still have to have the backup of the call centre if somebody needs to get hold of someone and talk to them and ask them questions. If we think about the massive amount of productive time that is being lost every year by people who are trying to get hold of the Inland Revenue Department and are not able to get through the cost is quite significant. So I think that is something that the department really does need to give some thought to. 
I know that the Inland Revenue Department is going through an upgrade of its computing systems. I am interested—and I am sure we will deal with it when we get to Part 5—in the fact that one of the things this bill does is allow the capital costs of unsuccessful software development to be tax deductible. I am sure that that will not apply to the Inland Revenue Department’s development of its own software if that turns out to be unsuccessful! Given the huge amount of cost that seems to be involved and some of the stories associated with this development of new software for the Inland Revenue Department perhaps it should make it tax deductible although— 
Hon Clayton Cosgrove 
: Would Dotcom software be tax deductible? 
CHRIS HIPKINS 
: Would Kim Dotcom software be tax deductible? Well that is something that I am sure we will talk about when we get to Part 5. I can feel another speech coming on when we get that to part of the legislation. 
To summarise the contribution I want to make to this bill I think electronic filing is a great thing. I think that New Zealanders will welcome the opportunity to file more information with the Inland Revenue Department— 
Hon Clayton Cosgrove 
: If the computer works. 
CHRIS HIPKINS 
: —if the computer works—electronically. I think that is good. It potentially is a great productivity-enhancing measure but the message to all New Zealanders—and we live in the electronic age where New Zealanders do so many things online—is that this is one of the more serious things they will do online so they need to make sure they get it right. This is not just updating your Facebook status or sending a tweet. Filing something electronically with the Inland Revenue Department has quite severe consequences if it is wrong. One or two colleagues have discovered that filing an unwise Facebook status update can get them into hot water as well but it is nothing compared with the hot water they would be in if they filed something incorrectly with the Inland Revenue Department. The department would be all over them. 
Just as the heavy hand of the law should deal with people who knowingly file incorrect returns in other areas so too should that be the case with the Inland Revenue Department. I think it is very concerning that according to this Government according to our own Prime Minister it is OK for people to knowingly file information that is incorrect and to state things in a return that they sign that they know are not true and to then try to claim ignorance when challenged on that. A person filing an incorrect tax return could not claim ignorance. They could not claim that they simply did not know about it. They could not claim that they had not read the return that they signed. That simply would not be an acceptable defence to the Inland Revenue Department and nor should it be. Nor should it be an acceptable defence for elected officials to high public office to try to claim that about the forms they fill in either. The New Zealand public should not be held to a separate standard from that to which we hold the people in the highest office in the land. They should be held to the same standard as every other New Zealander and filing a false return while knowing it is incorrect is unacceptable for anybody in New Zealand to do.