Nash Stuart: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In CommitteeText is incorporated into the Bound VolumeNash Stuart: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In Committee[Sitting date: 12 April 2016. Volume:713;Page:10404. Text is incorporated into the Bound Volume.]STUART NASH (Labour—Napier): This is the part that there was quite a bit debate on in the Finance and Expenditure Committee. We just do not think it went far enough at all. The principal Act the Goods and Services Tax Act applies to all consumption that occurs in New Zealand. The reason for that is that it is fair it is efficient it is simple it is easy to understand and there are no complications. But the thing about this is that when GST was introduced in 1986 I do not think anyone had ever heard of the internet let alone the online purchasing of goods and services.GST was set at around 10 percent it then went up to 12.5 percent and now it sits at around 15 percent after this Government said that it would not increase GST but it did. But that is the way it is I suppose. The concern we have is that this is about putting a goods and services tax on intangibles. This is online services—cross-border supplies of remote services. So it is targeting a certain area. It was colloquially called the net services tax. If a company generates New Zealand receipts exceeding $60000 over a 12-month period then it has to pay GST. That is consistent with a New Zealand company.But the thing with this bill is we think it should have gone a whole lot further. What this is in effect doing is providing a 15 percent competitive advantage to all goods purchased offshore and not just electronic goods. I mean it is good that we are levelling the playing field in terms of electronic goods and services. We agree with that and that is why we are supporting this part of the bill. But here was an opportunity to go even further. I come from a provincial city where a lot of our retailers are struggling at the moment. Part of that is because there is not that much money in the economy because things are a bit rough in provincial New Zealand but also part of that is due to the massive explosion in online shopping.You can go online these days and buy a pair of jeans anywhere in the world and they can be delivered within a week and do you know what? You get an automatic 15 percent discount on those because there is no GST and yet those retailers down on Main Street New Zealand have still got to pay GST. We think that this part of the bill should have gone a hell of a lot further than it has. It is a start. It is a start—we recognise that.There has always been this argument that “Oh well. It costs more money to police the compliance than what you would collect in revenue.” I do not agree with that in this case. Sure we are only doing this on online goods so it is easier. It does not place an impost on the Customs Service to handle physical goods in any way shape or form. But what it is in effect doing is burying our heads in the sand and saying that this is too difficult or we don’t really care about middle New Zealanders who own the retail shops who are competing with these offshore multinationals.It was a classic case. Part 3 of the bill provided the Government with the perfect opportunity to actually level the playing field and that is all—not tilt the playing field in terms of New Zealand suppliers or retailers but just level the playing field for New Zealand retailers. Instead what I believe it does is it actually tilts the playing field towards the large multinationals as opposed to the good hard-working middle New Zealand families who own the retail stores and who are missing out on these things.We hear time and time again how people have bought a fantastic book on Amazon or they have bought something from Abercrombie and Fitch or any nature of goods over the internet. It is becoming part and parcel of the way we shop. One of the reasons why New Zealanders have embraced this form of retail therapy is that it is cheaper—it is cheaper. What we are talking about here is not tangible goods and services that cannot be bought in New Zealand. If that were the case you could sort of understand that. You know—“I can’t buy this down here. The only place I can buy it is overseas. Therefore I’ve got to.” Well that sort of makes sense. But when the same goods and services that you can buy downtown you can also buy on the internet for a 15 percent discount first and foremost because there is no GST then that is plain wrong.The Inland Revenue Department admits as does everyone—and I suppose this is a common theme throughout the speeches today—that a tax system has got to be fair it has got to be efficient and it is got to be simple. This part of the bill misses a great opportunity to address a real problem we have got in retail New Zealand—that is GST should be charged on online tangibles.