Genter Julie Anne: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Second ReadingText is incorporated into the Bound VolumeGenter Julie Anne: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Second Reading[Sitting date: 31 March 2016. Volume:712;Page:10127. Text is incorporated into the Bound Volume.]JULIE ANNE GENTER (Green): Tēnā koe Mr Assistant Speaker. Tēnā koutou e Te Whare. The Green Party is supporting this tax bill. It is largely uncontroversial. It does fall well short of the changes that would be needed to have a fairer simpler tax system that creates a smarter greener New Zealand where everyone has the same opportunities which is what the Green Party would like to see. But nobody would have expected that from the National Government I think—any substantial changes that would actually create a fairer greener New Zealand. Unfortunately the last 7½ years have shown that all it is really interested in doing is tinkering around the edges and protecting the status quo.But this bill—and a lot of credit has to be given to the officials and the well-informed submissions we received at the Finance and Expenditure Committee—does make some completely reasonable changes although they are small. The three main changes in this bill which have been mentioned by other members here today include of course the residential land withholding tax which is bringing in line the rest of the tax system with the new changes from the Government’s brightline test bills which were a package of bills the goal of which was to reduce property speculation. Unfortunately that package of bills is woefully inadequate to actually create a fairer tax system and reduce the harmful tax loopholes that currently exist which incentivise over-investment in property rather than in the productive sectors of the economy and which have led in part to the rapid increase in house prices in Auckland which is now spilling out into other parts of the country. So this part of the bill is simply enacting the residential land withholding tax so that offshore buyers at the point of sale of the house have a certain amount withheld to ensure that they do meet their tax liabilities here in New Zealand.The problem with this and the rest of the package is that the brightline test applies only to residential land which I think is going to be a very difficult test to apply in practice because any land in New Zealand really could be used for residential purposes if people go through the right resource consent applications to get consent to do so. It does not make sense that you would gather tax only on residential land when there are capital gains that are realised on other types of land. So it is a really bizarre distinction that the Government has introduced in its brightline test.The other really obvious problem with the brightline test package is that it applies only to properties that are bought and sold within 2 years. Of course the vast majority of OECD countries have a comprehensive capital gains tax that usually excludes the family home which is the Green Party’s policy for New Zealand. For those that have holding periods the average holding period is 5 years. Many countries have longer holding periods and that is how you can effectively reduce this perverse incentive to invest in property where ultimately it is usually windfall gains that people are receiving. There is no reason why the income they receive from that windfall of having bought a property and sold it at the right time during a property boom should not be taxed just like any other income.At the select committee we heard a lot of submissions on this. I think it is quite tricky to apply the residential land withholding tax. There is a certain amount of bureaucracy that is created by it and that is why it is unfortunate that the rest of the package of the brightline test does not apply to more properties. I think it would make it much simpler and easier and it would make more sense to have the residential land withholding tax apply to all property sales because obviously if overseas buyers are investing in property in New Zealand and making money off that it makes sense that they should have to pay tax on the income that they receive from that windfall. That is part of how we have a fairer simpler tax system that gives opportunities to everyone and creates a thriving economy.In respect of the capital gains tax I cannot overemphasise the importance of taxing capital for achieving a whole range of good outcomes for New Zealand one of which is more innovation and investment in the productive sectors of the economy research and development etc. rather than just throwing all of our money into property and also from a fairness point of view ensuring that housing is available to all New Zealands and that it is affordable for all New Zealanders. It is actually really seriously exacerbating inequality to not have something like a capital gains tax or even an annual capital tax.The second change that this bill makes is providing for GST to be levied on online services. A number of members in the House have talked about that today. The Green Party can support this in principle because it does make sense to ensure that all goods and services have GST applied to them. In our changing more globalised economy people are able to purchase more goods and services from overseas using the internet and it makes sense that GST should apply to those so that we are not disadvantaging New Zealand businesses that are selling goods and services here in New Zealand. They have to pay GST. It makes sense that online international purchases should also have GST applied to them. But unfortunately this applies to only about half of the problem. Actually it might be significantly less than half the problem because it is only online services and not goods and in particular low-value goods that are purchased from overseas. So that is something that the Government still has to deal with. We heard from Retail New Zealand and other submitters that there was this shortcoming in the bill.I will raise one other issue which unfortunately we did not hear about in the select committee but my colleague Mojo Mathers has raised it with me. I am interested in seeing whether there are other ways the Government could be resolving this issue and that is that for the many many New Zealanders who have hearing impairments or who are deaf like my colleague Mojo Mathers Netflix is actually pretty much the only service that is fully captioned because the Government is not requiring captioning of television programmes here in New Zealand or adequately funding it. Many deaf or hearing-impaired people are limited to using services like Netflix so of course this is going to make it more expensive for them to access those services. There is also the problem of Netflix and similar companies that provide these services cracking down on access to content. We have access to less content here in New Zealand than many other countries have. People like to use a virtual private network to access Netflix in the United States because there is a wider variety of content.This is an issue that I think the Government really needs to be engaging with because New Zealanders are missing out here and particularly hearing-impaired New Zealanders are going to have to be paying more to watch content that is captioned because the New Zealand Government is failing to deal with the captioning issue here in New Zealand. Obviously I do not think that it makes sense to exclude Netflix from having to pay GST simply because of this problem but we should be trying to address the problem with content and captioning here in New Zealand. National really is not taking any steps in that direction that I can see.Finally there is the student loan information. This was tricky for the Green Party because to be quite frank we do not agree with the policy of loading up students with debt in order for them to have an education. We do not think that is how you build a smart green economy—forcing students to take out large amounts of debt which they then have hanging over them for many years after they finish their degrees. We think that we should be providing students with opportunities to get an education. If you do not have that debt hanging over you after finishing your studies then there is the possibility for you to take risks to be entrepreneurial and to use the information and skills acquired during your studies to do things that are going to make New Zealand and the world a better and more exciting place. That is good for our economy. So it does not make sense to crack down on students but that is not the subject of this bill. This bill is tightening up some aspects of it. It is allowing information sharing between Australia the Inland Revenue Department and the Australian taxation office.I would have to ask this question particularly because only last week the Government admitted it has no idea of the amount of tax that it is missing out on from multinational companies that are avoiding paying tax: why are we putting so much effort into chasing down students who owe money simply because they got an education here rather than pursuing the estimated half a billion to a billion dollars a year we are missing out on because multinational corporations that are operating in this country are avoiding paying tax? I would like to see more information sharing and work through the OECD to solve the problem of tax avoidance and tax evasion rather than have us crack down on students. But there is one good provision in the bill which includes streamlining the rules applying to borrowers who work overseas but are entitled to interest-free student loans because they work for approved charities. I think that is a good thing. So ultimately the Green Party supports the bill.