Robertson Grant: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Third ReadingText is incorporated into the Bound VolumeRobertson Grant: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Third Reading[Sitting date: 03 May 2016. Volume:713;Page:10730. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): For those who still have some ability to hear after Mr Bennett’s speech can I just make the point that Stuart Nash made a small error when he mentioned the GST rate and the reason he made that error was that he made the mistake of believing John Key. He made the mistake of believing John Key who told New Zealanders there would be no increase in GST. It was his “read my lips” moment. He said “Read my lips: there’ll be no increase in GST.” and what did he do when he got into power? He increased GST to 15 percent. This is the same John Key who when David Bennett gets up and says “Oh be fearful of what new taxes might arrive.”—well look in the mirror Mr Bennett. Actually do not look in the mirror—a very dangerous exercise if you are David Bennett.Look across the caucus Mr Bennett and you will see the new taxes that the National Government has brought in. Let us just run through the new taxes that it has brought in. Firstly we have effectively with the brightline test a new tax albeit a tax that is going to be completely ineffective in the job that it was asked to do of trying to control the out-of-control speculation in our property market. In fact the Finance and Expenditure Committee during the process of this bill heard that the brightline test will probably bring in—what was it—around $5 million.Fletcher Tabuteau: If that.GRANT ROBERTSON: Maybe $5 million if that. The Government was told by Treasury to make it a 5-year brightline test. It has made it only a 2-year one so it is a new tax albeit an ineffective one as well. Then we have also got the border tax that was brought in by the National Government in the last Budget—the tax on all passengers coming over the border. But of course there were “no new taxes”—that was what David Bennett told us. Then we have also had the levy on telecommunication providers and we had John Key speculating about another new tax: the land tax. So John Key has now introduced a fourth tax and then this bill creates the fifth new tax from the National Government. So for David Bennett to stand up in front of this House and say “Be fearful about people making promises about increasing taxes.” he needs to own the fact that his Government has broken the promise that it made to New Zealanders on that score.On this bill there are two or three things that I want to say. The first of those is that we will be supporting this legislation as we have done with other pieces of tax legislation brought forward by this Government because it takes steps—timid steps—towards dealing with some of the issues that are affecting our taxation system. In particular it is one of the new taxes: the introduction of GST on online services. As other colleagues have said during this debate the goal stated by the Inland Revenue Department (IRD) and by the Government was to create a level playing field—to create a level playing field—when it comes to taxation.Some companies in New Zealand will be delighted when this bill passes. I am thinking here particularly of Spark which will be looking and saying: “This is great. We are going to be able to put our offering in terms of Lightbox on the same footing as Netflix.” Absolutely terrific. Well done—put a tick in that box. But if Simon Bridges goes down to Unity Books in Wellington and he makes sure that he buys the—Phil Twyford: Good to see you here tonight Mr Bridges.GRANT ROBERTSON: Well you know he would go down there. He wants to get the complete set of Nancy Drew novels because that is what Simon has been looking for all these years. They are good books do not get me wrong—they are good books—but he has gone down there to get the complete set of Nancy Drew novels. He fancies himself as a bit of a detective. He is going down there to do that.When he goes down there to do that he might stop for a minute and think: “Hang on can I order these as an e-book? Can I order these as an e-book for my Kindle?”. That is what Simon Bridges might be thinking. When he goes and says “Right I am going to get the Nancy Drew novels as an e-book on my Kindle.” the charge will apply. But then if he decides to order hard-copy books—because we know he likes to have them beside his bed at night piled up there the Nancy Drew books. We all want them do we not? Yes that is right but Simon Bridges particularly wants them. If he goes and buys those and gets them imported over here there will be no GST there—no GST there but there will be at Unity Books.That is the problem: the level playing field has not been created. For the main street booksellers it has not been created. Some of the best submissions we got in this committee were from Retail New Zealand and members of Retail New Zealand who came and said: “We’re finding it hard to compete. We want some support from the Government. We understand and we accept the logic of a level playing field but that did not happen.”So there is no level playing field for those main street retailers who cannot ensure that GST is charged on imported goods coming overseas. So by all means charge GST on intangibles. That is a step forward but the Government has missed out here when it comes to truly creating a level playing field.The other matter I want to refer to is the introduction of a residential land withholding tax. It has been mentioned before by my colleague Stuart Nash that this fits into the broader tax programme that the Government brought in in terms of the brightline test and the other issues that we will soon see some information from around the requirement for people to have a bank account and an IRD number when from offshore they are purchasing property. Very soon we will have that information about the impact of foreign buyers. John Key is softening up the New Zealand public—it is suspicious that he might actually know how many people are going to be identified in that list of foreign buyers. He is concerned about the New Zealand public’s reaction to that and so might he be and that is why he has raised the idea of a land tax.But as a package this is weak. It is not really going to deal with the speculation that is pushing house prices up making them utterly unaffordable. It is pushing up the house price to income ratio to 10:1 in Auckland—one of the highest in the world. Property values are going up by $100000 this year out of reach of most New Zealanders. The National Government continues to act in the interests of the speculators and act in the interests of those who are not part of the productive economy those at the very top but not act in the interests of the majority of New Zealanders—the New Zealanders who want to get into the property market. These measures are inadequate when it comes to trying to deal to that.They are part of a tax work programme. The residential land withholding tax is part of a tax work programme that the Government had put to it by the IRD through 2014 and 2015. It accepted the residential land withholding tax but what is not here is action to crack down on those who avoid their tax and those who evade their tax. That has sat in the very same work programme as the residential land withholding tax and the Government has ignored the advice that the IRD has given it.It is worse than that. The IRD started a programme of work to review the taxation of foreign trusts. It started that programme of work in 2013 and 2014 along with the residential land withholding tax and it was going swimmingly until about November 2014 when a report went to the Minister of Revenue that said: “We’re going to be with you on this review of taxation in December 2015.” And right there at the end of November 2014 along came John Key and his personal trust adviser Ken Whitney. They intervened. They intervened they got to Todd McClay and Todd McClay got to the officials and all of a sudden—all of a sudden—the work programme that the IRD had where it said that the review of foreign taxation rules was a key focus was gone. Respected officials from the IRD who had worked hard on legislation like this were forced to write to their colleagues that the Minister had stopped the review of foreign trusts.What we should be seeing is legislation coming to this House that cracks down on those multinational companies that do not pay their fair share that restores New Zealand’s reputation as a place of integrity when it comes to tax and that gets rid of our reputation as a tax haven in respect of foreign trusts. That is the legislation that should be in front of the House today. That is the work that was in the work programme of the IRD until Todd McClay got his riding instructions from the Prime Minister’s trusted adviser to get rid of that.This legislation is a missed opportunity. This should have been about our tax system being robust and being ready for the 21st century supporting our main street retailers and restoring our reputation and it fails on all counts. The National Government is out of touch in my view when it comes to the impact of taxation and how to make the best of taxation to support a productive economy in New Zealand. This is a piecemeal tokenistic effort from the Government. It is one that the Labour Party supports but reluctantly so.