Nash Stuart: Taxation (Transformation: First Phase Simplification and Other Measures) Bill — Third ReadingText is incorporated into the Bound VolumeNash Stuart: Taxation (Transformation: First Phase Simplification and Other Measures) Bill — Third Reading[Sitting date: 31 May 2016. Volume:714;Page:11533. Text is incorporated into the Bound Volume.]STUART NASH (Labour—Napier): With a bill named the Taxation (Transformation: First Phase Simplification and Other Measures) Bill you would expect something at least transformational would you not? You would hope that a piece of legislation actually represents what it is or that at least the name would represent what it is—transformational.We are in an era where we have a whole lot of problems with our tax system at the moment. We are in an era where the Reserve Bank has said that 40 percent of all homes purchased in Auckland are purchased by speculators and the Governor of the Reserve Bank said that they are bought for capital gain because the yields are so low—and yet no capital gains tax. We have a brightline test that the Inland Revenue Department (IRD) said is insufficient to do anything with the housing market.What we have also got is a massive risk to our global reputation by people who are seen to avoid paying their fair share of tax. It is a real problem. It is a problem to the point where reputable international newspapers and magazines are naming New Zealand as a tax haven. That is an issue. A bill that changed that a bill that sorted out that issue would have been transformational. I am not saying that the changes in this bill are not necessary. What I am saying is that they are not transformational. What I am also saying is that we have a whole lot of issues within our tax system at the moment that demand urgent attention on behalf of the Minister of Revenue and I would guess urgent attention on behalf of the ministry to actually get this right not only for the integrity of our tax system but also for the integrity of our global reputation.Let us have a look at some of the things in this bill. As the Minister outlined it does make some pretty common-sense amendments. For example the commissioner can now receive emails or the IRD can send out emails and that is acceptable. I have one slight concern about that. IRD has stated that “Cutting paper use and increasing digital services for Inland Revenue’s customers will see annual paper savings equivalent to 1900 trees or nearly 16 million sheets of A4 paper”. As our forestry spokesperson I have a slight concern that we are actually not using trees and adding value here in New Zealand instead of exporting the logs overseas. But all this bill does is bring the system in to the 21st century. It should have been done a number of years ago. I am assuming that what it actually does is it codifies or legislates what is happening at this point in time.There are a couple of amendments here that I would like to talk about. One is the requirement about personal tax summaries. This is reasonably important for a whole lot of people. Currently what happens is that if a wage or salary earner needs an end-of-year assessment they can ask the commissioner for a personal tax summary to confirm any amounts of tax refund. They can get that within 30 days. If it is an unconfirmed summary for less than $200 then the IRD just pays it into a bank account. What the bill actually does is reduce the time from 30 days to 15 days and it increases the unconfirmed amount from $200 to $600.Why this is so important is that there are over 200000 people in this country paying secondary tax. A lot of those people actually pay more tax than is necessary. I would suggest that this provision will actually help them. I have said it before and I will say it again to anyone listening to this debate: if you pay secondary tax I urge you to request a personal tax summary and to phone up the IRD—make sure you have got your IRD number—and you could be in for a very pleasant surprise. In the past if you did not do anything you might have got $200; now if you do not do anything you can get up to $600 within 15 days. So I urge people to do that.The other thing is that there is a special tax code certificate. This may seem slightly minor but what it means is an employee can apply for a special tax code for their New Zealand superannuation or veterans pension income or their employment income from one or more employers. What I am hoping this will lead to is actually the necessity to do away with secondary tax. Secondary tax is paid by people who work two or more jobs. Let us make an assumption—let us make the assumption that people work two or more jobs not because they love working 22 hours a day but out of economic necessity.The problem we have got with the tax system as it stands is that they pay secondary tax in that second job. There is a good reason for it. It is a withholding tax. What happened in the past was that people who were working two jobs ended up with a big tax bill at the end of the year that they could not afford and which was a massive imposition. The withholding tax i.e. secondary tax is meant to have mitigated that but it means that it is a major impost on people. The IRD at this point in time actually owes Kiwis about $750 million in overpaid tax. A decent chunk of that—it is hard to quantify how much—is secondary tax. The thing about it is that after 4 years it drops off. So again I would urge people who work two or more jobs and pay secondary tax to actually phone up the IRD to see whether they are owed any money.Another interesting point in this bill is that it repeals special homeownership accounts. These are savings accounts that were closed in 1986 believe it or not. There was a provision in there saying that if you had more than $10000 you could claim tax credits etc. etc. and the IRD says that there are still a number of these accounts in existence—amazing. A number of these will not have been operated for 25 years. What this bill does is it will allow the relevant financial institution—usually a bank; not always but usually a bank—to close the accounts without having to pay back the tax credits as is currently the case. Again I would urge anyone who is listening or if you know of anyone who has one of these old homeownership savings accounts to get to the bank as soon as possible to make sure that you claim those tax credits. As soon as this bill is passed into law those tax credits are no longer available.We are supporting this bill because there are a whole lot of common-sense amendments here around things like automatic signatures. As I have said it brings the tax system into the 21st century. But yet again it is another tax bill in this House that is certainly not transformational. It is a missed opportunity but most important it does not deal with the substantive issues we have with our tax system in this country at the moment. They are New Zealand being seen as a tax haven and that posing a massive risk to our global reputation and the integrity of our tax system. That is a concern. The second one is the number of people who are actually avoiding paying tax because they buy a property not for a yield but for a capital gain.This bill does not deal with the substantive issues that are afflicting our tax system but we do support it; it is common sense. Onwards and upwards let us hope. Thank you very much.