Cosgrove Clayton: Income Tax Bill — Instruction to Committee In Committee Third Reading 
Cosgrove Clayton: Income Tax Bill — Instruction to Committee In Committee Third Reading 
[Volume:616;Page:12078] 
CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 That was an astounding speech from the member. I thought the member was better than that. I think that in National Party terms he is the moderate branch of the National Party. But we saw in that speech that his boss has pumped him up and punched him full of research notes and he has made a speech that he does not really agree with in his heart of hearts. They pumped him up punched him out there as the Opposition associate spokesperson on finance and told him to run the race line which he did. I am a bit disappointed because I think that bloke is not the worst National Party member in the Chamber. I think there are a helluva lot who are worse than him but he disappoints me. If he does not know why the Inland Revenue Department would not accept a tax return in which he claimed 19.5 percent on his income alone then he should not be Opposition associate spokesperson on finance. I think the Lexus the BMW and the mansion in Helensville or wherever it is would put paid to that. 
Let me dispel the usual National Party line. Its members tried to raise this argument in the debate on the Taxation (Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Act when they talked about why it is that Maori authorities are taxed at 19.5 percent. They ran an argument as did Mr Prebble that this was outrageous that it should be changed and that they would change it. Why has the National Party not changed it since this scheme of arrangement has been in place since the 1950s? How many National Governments have been in place since the 1950s? There is silence. Who was in power during most of that period? The National Party. There is silence again. 
I will tell members why that scheme of arrangement was put in place in the 1950s and endorsed by National Government after National Government. It is because the assets of a Maori authority unlike a private or public company are communally owned. Maori authorities are restricted in terms of their activities. They cannot sell those assets. They are restricted in what they can do with them. Also 90 percent of the recipients as Mr Key pointed out are on the lowest rate of tax. But the National Party would have the listeners in this country believe that any recipients of dividends from a Maori authority pay only 19.5 percent and if they earn extra income and go up into the top bracket they pay only 19.5 percent whereas the rest of us have to pay a different tax rate. That is not true. If they get a dividend from a Maori authority they pay 19.5 percent and if they earn extra income and move to a higher tax bracket then like any other Kiwi white yellow black or brown they pay the same rate of tax at the end-of-year wash-up—the same as everybody else. That is the truth for the benefit of Mr Prebble. That is the truth for the benefit of the National Party. I make this point again: it has been around since the 1950s because it acknowledges the special arrangement the communally owned and restricted arrangement that Maori authorities have over their assets. So that put paid to that little bit of spice from the National Party corner. 
 As chairman of the Finance and Expenditure Committee I want to pay tribute to committee members. I see that Dr Lockwood Smith is in the Chamber. He was on the committee throughout this tax bill which I believe is the biggest bill to come before this Parliament if not Parliaments in the Commonwealth. It seeks to do something that is relatively logical in taxpayer terms—that is to simplify. I acknowledge Mr Prebble’s point though. It is a bit ironic that we get 2000 or 3000 worth of pages of tax law that is designed to simplify but it is. It does not rewrite tax law in terms of new policy. It does not attempt to promote any new policy areas. It attempts to simplify and make things easier for taxpayers. 
I want to quote from that venerable tax commentator from PricewaterhouseCoopers tax partner John Shewan. He likens the process to repiling a 100-year-old house. He said: “Sooner or later the old framework has to be rebuilt as it just doesn’t cope with current circumstances. That is the position the old Income Tax Act had got to. While the new Act will be a shock to fully depreciated tax advisers it is a necessary exercise.” I think it is a necessary exercise. The process predates this Government. The process I believe to rewrite these tax laws to make them simpler and to give some certainty was started in 1994. The committee’s recommendation that the bill come into force on 1 April 2005 instead of 1 April 2004 was in order to give some transition and certainty.