Taxation (Consequential Rate Alignment and Remedial Matters) Bill — In Committee Third Reading 
Text is incorporated into the Bound Volume 
Taxation (Consequential Rate Alignment and Remedial Matters) Bill — In Committee Third Reading 
[Sitting date: 24 November 2009. Volume:659;Page:8237. Text is incorporated into the Bound Volume.] 
Taxation (Consequential Rate Alignment and Remedial Matters) Bill 
In Committee 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I seek leave for the Committee on the Taxation (Consequential Rate Alignment and Remedial Matters) Bill to take the bill as one question. 
The CHAIRPERSON (Lindsay Tisch) 
: Is there any objection to that course of action being taken? There is no objection. 
Parts 1 to 5 schedules 1 and 2 and clauses 1 and 2 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 It is a pleasure to take a brief call on this combined Committee stage of the Taxation (Consequential Rate Alignment and Remedial Matters) Bill. I reiterate the comment that we made in earlier readings that Labour will be supporting this bill. It is a bipartisan bill that carries on the good work of the Inland Revenue Department in tidying up the tax laws and adjusting the resident withholding tax rates in particular to the new tax rate regime. It is all good and worthy stuff. 
But as we said in earlier contributions to this debate it raises an important issue of principle and it is upon that issue of principle that I wish to briefly concentrate this call. The Minister in the chair the Hon Peter Dunne through his officials brought to the Finance and Expenditure Committee the proposal that the default rate on resident withholding tax be changed to mirror the top tax rate. The rationale for that was clear: it would most strongly incentivise taxpayers to advise their bank if they did not belong to the top rate because otherwise they would be paying way too much tax. 
But as a matter of principle—and going back to those very ancient principles that there be no taxation without representation and that the people’s House be the sovereign body that gives the authority for taxation—members of the select committee asked how many New Zealanders would be required by this bill to pay tax that they were not actually liable to pay. It asked how many would be caught as it were with the collateral damage of taxation by being inadvertently put on an inappropriately high resident withholding tax rate. The answer was in the first draft hundreds of thousands. I cannot recall the exact number; members will forgive me. But hundreds of thousands of New Zealanders would have found themselves overnight put on a tax rate to which they did not belong and therefore they would have lost income at a time when many New Zealanders many hard-working families are feeling the pinch and every dollar counts. The committee was willing to work cooperatively to make sure that that unintended consequence did not happen and credit goes to the chair Craig Foss and to the members all around the table. 
The officials were happy to work with the New Zealand Bankers’ Association—it is not often that we see the Bankers’ Association in the position of being good Samaritans to taxpayers one might say but we are very grateful for its input—and they and the officials worked out an alternative plan which was to have the default rate set at the modal rate. That is the rate most people pay the middle of the bell curve which is the 21c rate. That is more fair and balanced. That means that a much much smaller number of New Zealanders would be paying either too much or too little. The unders would balance out the overs and the incentives would still remain for new accounts. 
Approval was given by the committee for the bill to come back to the House with that amendment on two clear provisos. The first was that the committee was very clear about the principle that New Zealanders should not be taxed inadvertently at rates higher than they were liable to pay and that no Government of any stripe should put taxpayers in that position. Secondly we would expect the officials to work closely with banks and other financial institutions going forward to ensure that taxpayers are fully informed and are given every opportunity and that the way is smooth for them to adjust the rates. It will require some compliance costs for members of the public and there was some merit in the argument that for that reason they could go down to the lowest default rate but in the end we settled on the modal rate. It was a good process of compromise and a much better design. 
I am left I have to say with one slightly troubling question and the Minister might like to take a call on this. How did it get as far as that? How did it get to the point where a select committee had to sort out the fact that hundreds of thousands of New Zealanders would be paying too much tax tax that Parliament had not assented for them to pay? 
Craig Foss 
: It was a test. We passed. 
Hon DAVID CUNLIFFE 
: It was a test to see whether we were noticing chairman Foss says. It was a test to see whether we were awake. Well this is a test to see whether the Government is awake. That is not a good thing to do. The Opposition passed that test. If it happens again it will look like the Government is playing fast and loose with the Magna Carta and playing fast and loose with ordinary New Zealanders. 
I think that is probably enough said but I would be interested to see whether the Minister will take a call and explain to the Committee what advice he received on that matter and whether it was knowing forethought or unknowing accident that meant that that egg was caught just before it hit the floor as it were of the legislative process. But it did not break. 
Finally—and I know that my colleague Stuart Nash is very very keen to make a contribution on this bill; he has been prepping for it for quite a while—with regard to the Permanent Forest Sink Initiative I think New Zealand feels like it has a collective hangover today because it is the day after that dreadful emissions trading scheme bill went through the House by the skin of Ngai Tahu’s nose. It just got through and it is a very sad day for New Zealand. I cannot let the opportunity pass to say that we remain absolutely convinced and convicted that generations of New Zealanders will look back on us this week and ask how and why we did that. The provisions of this bill around the Permanent Forest Sink Initiative make it very clear that the Income Tax Act will end up bearing part of the weight of that future obligation. It is real money it is real debt liability and it is real bad news for our children. Thank you. 
STUART NASH (Labour) 
: 
 I would like to reiterate all of what my colleague the Hon David Cunliffe said and just elaborate on it a little bit more. He was dead right. But I suppose that one of the things that is slightly concerning which Mr Cunliffe alluded to was the fact that it did get as far as the select committee. Mr Foss said that it was a test. He said that in jest. It was a joke but I suppose it outlines the problem when we have all this legislation being rushed through under urgency. This Taxation (Consequential Rate Alignment and Remedial Matters) Bill went to the Finance and Expenditure Committee which was great so we were able to pick up the problem. But a lot of legislation is being rushed through the House under urgency that has not had the scrutiny of a select committee. 
Hon David Cunliffe 
: Half the ETS bill. 
STUART NASH 
: Half the emissions trading scheme bill—exactly. That is of huge concern. If we had not picked that up well over 3 million New Zealanders would have been overtaxed. That sounds like a lot because people will say that there are only 4 million New Zealanders in this country but we have to remember that we are talking about resident withholding tax here. That means tax paid on the money in bank accounts that have been set up for children who are 1 2 3 or 5 years old by their parents because if we have bank accounts it does not matter how old we are we are liable to pay resident withholding tax on the money. That means that everyone with a bank account—not just people earning salaries and wages but everyone with a bank account—would have had to pay that tax. The vast majority of those people are actually on the 12.5 percent rate not on the top 38 percent rate. 
That is why the Labour Party completely agrees with the due process that every bill is supposed to go through in this House—that is first reading second reading Committee stage and third reading. We end up with robust debate and we allow New Zealanders to come in stand in front of a select committee prepare their submissions and voice their concerns about or often their support for various legislation. That is robust democracy in place. 
On that note I will speak briefly about Supplementary Order Paper 93 which the Minister in the chair the Hon Peter Dunne has put forward to amend the bill. I will speak about new clause 70B which the Supplementary Order Paper proposes to insert the one about GST on inbound tour package services. This amendment is quite unusual because it clarifies that GST applies to inbound tour operators. This was a fuzzy bit of the law. Some people paid GST and some did not pay GST but there was real concern over the intent of the law. Obviously if we have a law that is as unclear as this then we need to do something about it. What this law does is to say that from the period from 1 July 2007 to 30 June 2008 a zero rate will be applied. So in essence it is saying that if an inbound tour operator has a concern with this and approaches the Minister of Tourism—who is the Minister of Tourism? 
David Bennett 
: John Key. 
STUART NASH 
: It is John Key; that is right. How this happened is that John Key as Prime Minister I understand attended a conference of tour operators and he was asked about this. He said he would sort it out for them. That was seen by many as the Prime Minister saying: “Don’t worry about it. I’ll sort it out.” He has finally learnt that in fact what he has to do—like every other politician from Prime Minister down—if he wants to make a law change is go through due procedure. 
The legislation is actually saying that in that period a zero rate will apply. That sets a slightly dangerous precedent because if people have already paid GST like a lot of people did they will get a refund. If they did not pay it then that is fine: “Don’t worry about it guys. You’ll be right.” The precedent that may set is that other people who have concerns about the law or who might see a little bit of fuzziness will say that goodness if those people can have a retrospective holiday from their tax or get their tax wiped retrospectively then so can they. Labour obviously supports this bill. We will support this Supplementary Order Paper because it is probably the right thing to do as the law was so unclear. But I would just highlight the fact that it sets a little bit of a dangerous precedent and certainly Labour would not like this to be done too often. 
Let me talk about some other things in the bill. As Mr Cunliffe mentioned resident withholding tax was the main gist of this bill. It was the area where the vast majority of the debate was centred. But there are other things. The portfolio investment entity rate was changed to line up with the company tax rate. Those rates were put in place with KiwiSaver and the jury is still out on whether the portfolio investment entity is the right structure to have. There were submissions on that at the select committee but we decided that anything to do with portfolio investment entities apart from rate alignment was not part of the committee’s ambit so we did not discuss it. The tax rates on secondary employment and extra pays are being aligned with the new primary tax rates. That is what a lot of the bill is about. Further there is a new 12.5 percent tax rate for secondary employment income and extra pays are being introduced. Again that just aligns it with the bottom marginal rate which is important for people who have two or three jobs. They are paying the secondary rate of tax and they then have to go through the process of claiming refunds. That change is important. We talked about the Permanent Forest Sink Initiative and Mr Cunliffe also talked about it. 
If I could digress ever so slightly I would say that Mr Foss stood up yesterday and said that he was disgusted at some of the language that was being used. I sat there thinking “Goodness me!”. I will say what disgusts me. It is the fact that we are putting on a $100 billion liability. What can we say to our children when they say: “Dad what went on in Parliament back then?”. We will say: “Well son we spoke against it. We fought against that but that was a National bill.” But that will be changed anyway because Labour will be back in Government in 2 years’ time. Members should not worry about that. 
The bill amends the Income Tax Act 2004 and the Income Tax Act 2007 to include a forester who receives emission units under the Permanent Forest Sink Initiative with its special income tax rules to apply to a forestry business—it is quite technical. There are changes to the beneficiary income rules. There is electronic communications. Electronic communications allow the Inland Revenue Department to send out electronic notices if there are no reasonable grounds for the department to believe that the communication would not be received by the person concerned. We debated this quite a bit. The issue was what is the definition of “reasonable grounds”. We understood the logic behind this. The Inland Revenue Department sends out I believe something like a million pieces of mail a day. Is it a million a week? 
Hon Peter Dunne 
: 100000 a day. 
STUART NASH 
: Well whatever it is it is a huge amount of mail. What this will hopefully do is streamline the process. It is an efficiency measure. But we just need to be clear on the definition of “reasonable grounds” and therefore in what circumstances a person could reasonably be expected to have received an email. Someone suggested that with the modern email systems these days if someone opens an email it automatically sends something back saying that it has been received. Unfortunately the Inland Revenue Department’s email system does not allow for that. Hopefully there will be money to change that so people can confirm the receipt of messages which would make things a lot easier. The tax recovery obligations were good. 
In relation to personal tax summaries the Tax Administration Act is being amended to provide the Inland Revenue Department with more flexibility. Again that is to allow a reduction in compliance costs and provide efficiency for the taxpayer and for the department’s administration. Again that goes to the heart of the problem of 100000 pieces of mail a day being sent out and reduces that. There was slight concern expressed however by submitters like KPMG that it would disengage people from the tax system or they would not automatically get a tax summary and therefore they may not be aware that they are owed a refund. We hope that the Inland Revenue Department will manage that process. 
There was the correction of minor errors. That was a proposal that allows the Inland Revenue Department the discretion to allow taxpayers to correct minor errors in tax returns. It is about $500 at the moment. Some submitters suggested it should go as high as $10000 but the committee heard the department’s submissions on that and took its advice. The committee believes it should stay at around $500. 
One issue that we debated for a little while was the requirement to pay disputable tax which will itself be non-disputable. The Inland Revenue Department currently has the power to require in exceptional circumstances certain taxpayers to pay tax in dispute before the dispute is decided. That is to address risks such as flight risk. We understand this has been put into force only twice in the last 10 years so it is quite rare. But KPMG in its submission said: “We believe that this change is more than just a remedial amendment as it removes the right of appeal available to taxpayers. We struggle to see how any amendment which removes the ability of taxpayers to dispute the commissioner’s position can be properly described as remedial.” We talked to the Inland Revenue Department about that and the department assured us that it is used only in absolutely exceptional circumstances. We said OK we would agree on it but again it is something that we would like to monitor. In effect it takes away the right of every taxpayer to challenge in a court of law the commissioner’s decision. 
Amy Adams 
: No it doesn’t. 
STUART NASH 
: Yes it does. In the end we decided that the risk was worth this legislation going ahead. We heard KPMG say that it is sort of OK so we stuck with it. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I will take a brief call to respond to three points that were raised in the preceding contributions. Firstly with regard to the resident withholding tax issue let me say with due respect to Mr Cunliffe that this is a slightly more complicated issue than he portrayed it to be. I think the solution the select committee has come forward with is a very elegant one. It was not quite as straightforward in the original drafting as he made it appear but I am very comfortable with the committee’s recommendations and I think it has done the bill credit in that respect; I acknowledge that. 
The GST issue that Mr Nash raised has quite an interesting history. It goes back to about the year 2000 when the law was first changed to clarify a number of issues regarding the treatment of various aspects of tourism for GST purposes. One of the consequences of that was this ongoing debate about facilitation fees. Effectively over that period between 2000 and the present roughly half of the tourism sector thought it was subject to GST and roughly half thought it was not. There had been an ongoing dispute. 
I forget precisely which year it was but 2 or 3 years ago the Inland Revenue Department issued a ruling that appeared to give comfort to one side of the argument and not the other. That led to some controversy and confusion. I can recall as a member of the previous Government having discussions with the then Minister of Tourism Damien O’Connor about how this issue might be resolved. We were not able to make progress on it before the election. It simply ended up as unfinished business at that time. 
The matter then came back on to the table this year and the Prime Minister as Minister of Tourism became involved. Effectively we have said: “Look we will give you that one year. From 1 July 2008 everyone will pay the GST. We will not have the debate about whether the fees are subject to GST. From that point forward everyone will be in but there will be a 1-year holiday to give people breathing space.” 
There are winners and losers in this. Those people who have dutifully paid since 2000 might well feel a little aggrieved. On the other hand the dispute is a finely balanced one and I think that the solution that has been worked out is reasonably elegant. I take the member’s point about setting a precedent. I think this is one of those rare things that does not come into that category but we do need to be mindful that we do not open up that opportunity. 
The issue of electronic communication and the ability of people with regard to email is an important one. It is much bigger than just the particular issue that is set out here. Mr Nash got close to it when he started talking about the paper war; the 25 million pieces of correspondence that the Inland Revenue Department sends out a year or 100000 pieces a day. I have been saying in recent speeches that we will have to move away from a paper-based system. It is inefficient it is hopeless and it is years out of date. We need to bring our tax administration into line with the requirements and the abilities of the 21st century. 
When we put future inland revenue systems and technology in place in the late 1980s and early 1990s emails and websites were all things for the future. What we are trying to do now pending the much bigger change is make it more possible for people to communicate in the way in which they would do their own banking and every other form of activity. I know it is not in this bill—it will be in the next one—but if the member wants to have a look at what we are doing with the student loan administration he will get a sense of what lies ahead. 
I conclude on this point. I am grateful to the Committee for its consideration. I did promise the House when the last tax bill was considered that this one would be different; so it has proven to be. I am mortified that the Supplementary Order Paper is so short after my last effort in that regard and that the bill itself is so brief but I am grateful for the consideration that the Committee has given it. Thank you. 
The question was put that the amendments set out on Supplementary Order Paper 93 in the name of the Hon Peter Dunne be agreed to. 
Amendments agreed to. 
The question was put that the following amendments in the name of the Hon Peter Dunne be agreed to: 
to omit from clause 15F subclause (5); 
to omit from clause 15H(11) “Subsections (1) to (10)” and substitute “Subsections (1A) to (10)”; and 
to omit from clause 69 “Sections 70 and 71” and substitute “Sections 70 to 71”. 
Amendments agreed to. 
A party vote was called for on the question  
That Parts 1 to 5 schedules 1 and 2 and clauses 1 and 2 as amended be agreed to. 
Ayes 112 
New Zealand National 58; New Zealand Labour 43; ACT New Zealand 5; Maori Party 4; Progressive 1; United Future 1. 
Noes 9 
Green Party 9. 
Parts 1 to 5 schedules 1 and 2 and clauses 1 and 2 as amended agreed to. 
Bill reported with amendment. 
Report adopted. 
Third Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (Consequential Rate Alignment and Remedial Matters) Bill be now read a third time 
. This bill’s content is technical in nature. It introduces a number of measures to fine tune earlier changes to the tax rules. I will speak very briefly about these. 
The principal feature of the bill is the alignment of the resident withholding tax rates on interest with recent changes to personal tax rates and the 30 percent company tax rate introduced last year. As a complementary measure the bill also aligns the portfolio investment entity tax rates with the new personal tax rates so that portfolio investment entity rates will be 12.5 percent 21 percent and 30 percent. It also adjusts the income thresholds at which the portfolio investment entity rates apply so as to ensure that people who invest in portfolio investment entities are not disadvantaged relative to direct investors. Other minor changes have been made to help reduce compliance costs for taxpayers and to smooth the Inland Revenue Department’s administrative functions including allowing the Inland Revenue Department to accept corrections of minor errors in subsequent returns and allowing tax agents more time if needed to allocate beneficiary income. In addition to these changes the important Supplementary Order Paper 93 in which several urgent tax measures are proposed has been added to the bill. 
The first of these measures proposed under the Supplementary Order Paper deals with the longstanding debate that has surrounded the GST treatment of facilitation services for tour packages for overseas visitors to New Zealand. Under the changes proposed these services will be subject to GST at the standard rate of 12.5 percent but the legislation also includes a transitional provision allowing inbound tour operators to zero-rate these services for the year ended 1 July 2008 which will help minimise any adverse affects on any inbound tour operators including those operators who did not zero-rate services for that year. The second item proposed under the Supplementary Order Paper makes changes to the supplementary dividend rules in the Income Tax Act to allow newly signed tax treaties with Australia Singapore and the United States to come into force. The third set of changes introduced by the Supplementary Order Paper and which I should make reference to will ensure that the recipients of New Zealand’s superannuation and the veterans pension will remain subject to New Zealand tax while they are travelling overseas but if they decide to live overseas the pensions will not be subject to New Zealand tax. 
I want to record my thanks to all of those who have worked on the passage of this bill so far. My particular thanks are due to the Finance and Expenditure Committee members for their consideration of the bill for passing the test and for the recommendations that they put forward to improve the outcomes for taxpayers. I also thank the drafters and the policy officials who worked on the detail of the bill those who made submissions on the changes it proposes and to everyone who took an interest in it. Finally I thank those members of the select committee and those members of the House who have contributed to the debates on the bill for their input and for their contribution to its progress. I am more than happy to commend the bill to the House. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Labour supports the Taxation (Consequential Rate Alignment and Remedial Matters) Bill. Labour believes this bill is a technical bill that continues one of Labour’s work streams and makes some necessary changes to the underlying tax law. In the Committee stage debate the Committee has considered the role the Finance and Expenditure Committee played in ensuring the House was not presented with a bill that would have unfortunately ended up with some 3 million New Zealanders paying more tax than they legally owed. The Committee reflected on the fact that that would have been an unwise and improper precedent for this House to set and it further reflected that it shows the importance of a proper select committee process. 
The Minister of Revenue in his closing remarks in the Committee stage quite rightly said that this was a tax bill unlike the previous one and we thank him for that because the process in the previous tax bill the international tax bill was a bit of a shocker I think is the technical term and we faced inordinate pressures. But at least the material for that tax bill was presented to the select committee albeit with a very tight turn-round and that does stand in contradistinction to the process followed by the emissions trading scheme bill that was considered yesterday. 
It is on the record of this House in the annals of this House that the emissions trading bill was deadlocked in its select committee and discharged back to the House without amendments and indeed without even seeing a departmental clause by clause report or a redline. That was added to by the fact that very substantial Supplementary Order Papers including a late amendment around a very important Treaty clause were presented to this House for consideration on the day on which the final bill was passed. We are happy that this was not a bill like that bill and happy that the select committee could play its role which was with the help of officials and a very useful submission from the New Zealand Bankers’ Association to make a significant change around resident withholding tax default setters. So we have ended up going for the default rate at the modal income tax rate of 21c in the dollar not the 38c in the dollar that was originally proposed by the Minister. He has been appropriate in accepting the recommendation of the committee. It should not in the best of all worlds require a committee’s intervention on a matter such as that but we are very pleased that the committee was able to work together to achieve the change. 
There are a range of other matters in the bill. I do not think the House needs us to go through all of them. There has been comment before about the Permanent Forest Sink Initiative the tax treatment of that and what defines a forestry business. It has been a matter of consideration at the Committee stage and in the second reading debate that has thrown into relief the provisions of companion legislation around climate change. My colleague Mr Nash has taken us through a summary of other important changes around beneficiary income rules electronic communications tax recovery obligations personal tax summaries GST and waste disposal levies and various other remedial matters. It remains at this third reading to commend the Taxation (Consequential Rate Alignment and Remedial Matters) Bill to this House. 
In closing I guess it is not a bill that is likely to see itself on the front page of a major daily newspaper but New Zealanders may reflect upon the fact that in giving this bill good consideration this is Parliament doing its job cooperatively and indeed consensually in the interests of all New Zealanders. 
CRAIG FOSS (National—Tukituki) 
: 
 It is tempting but I will not take the previous speaker’s bait. I will speak briefly and pick up on the acknowledgment and thanks of the Minister of Revenue and the previous speaker to all those who got the Taxation (Consequential Rate Alignment and Remedial Matters) Bill to its third reading. I also acknowledge the cooperation of members and parties in facilitating the bill’s progress through the House tonight to the third reading. 
Most of the issues were discussed during the second reading and as the previous speaker also noted there was consensus all round on this particular bill. I thank the Minister for his continuing with the general tidying-up cleaning up modernisation and synchronisation of our various tax laws and regulations within New Zealand. He is keeping a constant eye on the big picture and of course a constant eye on what is going on in Australia when carrying out the reviews that our various pieces of legislation must undergo. There is also a reflection on modern technology by hopefully saving the taxpayer a few stamps with the 100000 mail-outs per day from the Inland Revenue Department. I say that is absolutely unbelievable. I think the person who will not like that is interestingly the new appointee to New Zealand Post who might have somewhat of an interest in the issue. 
National commends the bill to the House. Again as Finance and Expenditure Committee chair I acknowledge the officials and advisers who got us to this point. I will pick up on the point that other members have made that the committee worked very well together to come up with solutions or amendments to the bill that were accepted by officials and by the Minister and his colleagues. It is a great example of good process and long may it continue. 
SUE KEDGLEY (Green) 
: 
 The previous speaker Craig Foss said that there was consensus all round on the Taxation (Consequential Rate Alignment and Remedial Matters) Bill. I will clarify by saying that actually there is not complete consensus in this House because the Green Party will be opposing this bill. 
People have suggested that it is simply a technical bill and it is true that there are some technical issues in here that the Greens support. The bill clarifies issues around for example the waste disposal levy which the Green Party supports but overall the consequential changes in this bill are changes to the original bill. It was introduced in mid-December 2008 just after the election and it was a bill that we strenuously opposed. These changes flow out of that original bill and for that reason the Green Party opposes them. We oppose them because we oppose the giving of very large very substantial tax cuts to the well-off while giving absolutely zero—zilch—to those who earn under $40000 a year. We believe it is immoral and unethical because by doing that we are further increasing the already huge gap between rich and poor in New Zealand and the incredible inequality we have in New Zealand. 
The extraordinary thing is that thanks to the policies of the 1980s and 1990s New Zealand has become a world leader in inequality. New Zealand may not be a world leader in many things any more but it has become a world leader in inequality because our society is becoming more and more unequal. In fact it has become more unequal at a faster rate than any other country on the planet. That is extraordinary. It is something we should be deeply ashamed of and this bill which amends the original bill will continue to make our society more unequal at a faster rate than that of any other country on the planet. This bill is making amendments to a bill that gave very substantial tax cuts to the well-off and nothing to those who earn under $40000 a year. Through that original bill we effectively will force New Zealanders to borrow around $10 billion over the next 10 years because of those tax cuts to the wealthy. This means that we will have to borrow more from future generations to fund those tax cuts. 
I also point out that not only is it unethical to have this sort of tax policy but also it is bad policy. When tax cuts are given to those who are paid under $40000 a year they tend to spend that money so it is stimulatory whereas when tax cuts are given to the very rich as the original bill did in general they tend to save that money. The Green members think that although this bill contains a number of consequential and technical amendments that we do not oppose we opposed the original bill and therefore we oppose these amendments to that original bill. Thank you very much. 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 I will take a very brief call to raise three points of particular interest to the Maori Party in the Taxation (Consequential Rate Alignment and Remedial Matters) Bill. The first point is that the bill’s definition of “forestry business” includes Permanent Forest Sink Initiative activities so that all foresters receive the same tax treatment. It is highly appropriate to be considering this legislation in the light of the new emissions trading scheme that was passed into law last evening with the Climate Change Response (Moderated Emissions Trading) Amendment Bill. The Maori Party was proud to advocate for the creation of large scale permanent forests to breathe new life into an environment that has often been taken for granted. 
Planting permanent forests is an intrinsic good in its own right and it will also reduce the amount of money that taxpayers will be liable to pay to meet this country’s financial obligations under the Kyoto Protocol. The afforestation provisions that the Maori Party negotiated as part of the amended emissions trading scheme legislation will enable iwi to plant permanent forests on Crown land and to accrue carbon credits in return. The Permanent Forest Sink Initiative encourages indigenous tree planting by issuing assigned amount units for carbon uptake. We have also asked for a review of the initiative with particular emphasis on the impacts on landowners. A review of the Permanent Forest Sink Initiative would increase the incentives for all landowners to plant trees. We are pleased in the interests of equity and fairness that the inclusion of the Permanent Forest Sink Initiative in this bill means that all foresters receive the same tax treatment. 
The second point I raise is the amendment to ensure that GST is payable on the waste levy imposed by the Waste Minimisation Act. The Maori Party supported every stage of the Waste Minimisation Act as it was taken through this House by former members the late Rod Donald and Nandor Tanczos. Our policy position acknowledged that waste disposal can damage and destroy the mauri the life essence of our land by reducing or destroying the life-supporting capacity of soils. The establishment of a waste levy incentivises us all to try to think carefully about the amount of waste we take to the landfill. It encourages us to recycle reuse repair respect and replace. We in the Maori Party believe that peoples have a fundamental right to clear air land water and food. This right means being protected from the production release and disposal of toxic and hazardous waste. It also brings with it a collective responsibility to ensure that we use the resources of the Earth in ways that preserve the planet for current and future generations. We are pleased to support the amendment to provide for GST being payable on the waste levy imposed by the Waste Minimisation Act 2008 as part of the long-term plan to protect our environment. 
Finally we note the importance of the amendment to the definition of “associated persons” in the Goods and Services Tax Act 1985. The definition of “associated persons” will be amended to ensure that the activities of charitable and not-for-profit bodies that do not involve the supply of goods and services in exchange for payment such as collecting or making donations are not subject to GST rules as they are not performed for profit. The Maori Party really supports this move which is another significant step in reducing the barriers that can get in the way of enabling the not-for-profit sector to continue to contribute so significantly to the well-being of our communities. We therefore are pleased to support this bill. 
STUART NASH (Labour) 
: 
 I rise in support of the Taxation (Consequential Rate Alignment and Remedial Matters) Bill for the last time in this debate on the third reading. It is basically a technical bill but it is a very necessary one. I was a little surprised and disappointed to hear the Green speaker Sue Kedgley say that they are voting against the bill. The Green member on the Finance and Expenditure Committee Dr Russel Norman never once voiced any concern or any prejudice against this bill. Perhaps if he had at any stage we could have addressed some of his concerns. But not once did he articulate any concerns so it is a bit of a shame to hear that the Greens are voting against it. I thought we had full consensus on the committee. The bill is not about cutting tax at all; it is just about aligning tax rates. In fact this bill will probably make it a lot easier for taxpayers. But that is democracy. 
As articulated by the chair of the committee and my colleague David Cunliffe I would like to thank the Inland Revenue Department officials and the independent advisers for the work they have done on the bill. It is greatly appreciated and I think we have good legislation here. People talk about technical and non-technical bills. However in my very brief experience every tax bill is technical in nature because tax by its very nature is complex. Even though the mandate of the Finance and Expenditure Committee and the Inland Revenue Department is to make tax legislation as simple as possible tax is not simple. Simple is an education Minister standing in front of a secondary school teachers union conference and reading them a children’s story and telling Parliament it was a very good read. It might be at the same intellectual level as those on the Government side of the House but I tell members that it is not for those on this side. Simple was also putting forward a bill that will cost every New Zealander around $45 a week up to 2050—such a liability of a legacy for future generations. That is simple but this tax bill is not simple. That is why we are very reliant on the advice and the excellent work done by officials and advisers and I thank them very much. 
This bill has “remedial matters” in its title because it contains remedial amendments to the Income Tax Act 2007 the Income Tax Act 2004 the Goods and Services Tax Act 1985 the Tax Administration Act 1994 the Income Tax Act 1994 and the Maori Trustee Amendment Act 2009. That is why I am a little disappointed in the Green member because this bill makes tax just that much easier for taxpayers. It meets the six tests that any tax legislation should meet: economic efficiency revenue adequacy revenue integrity simplicity of administration and compliance coherence and equity and fairness. As I mentioned and as all my colleagues alluded to there were concerns over the equity and fairness of the bill and the Labour members of the committee have a slight level of disquiet over the fact that so many people—I think it is around 1.4 million New Zealanders—will still be overtaxed on their interest as a consequence of this bill. People asked where the 1.4 million figure comes from. Children from 0 years of age and all the way up whose parents have set up their bank account pay resident withholding tax as well so there are a lot of taxpayers who are affected by this. However I think we have come to a good compromise. There are a lot of people who will be overtaxed but the Inland Revenue Department has assured us that it will put education strategies in place that will mitigate the risk of overpayment. We have accepted that and we will follow progress with interest. 
The main issue that the bill addresses is to align resident withholding tax on interest paid to individual taxpayers with the new marginal tax rates. I spoke at length about it in the second reading debate— 
Hon Darren Hughes 
: Very well actually. 
STUART NASH 
: Thank you very much I say to the senior whip. I urge the 1.4 million New Zealanders who will be taxed at the incorrect rate to contact your bank and get your resident withholding tax rate changed. That includes you Mr Speaker; I said “you” on purpose there because it also includes every MP. So make sure you contact your bank and sort that out. There are other provisions of this bill that did not receive nearly the time and effort put into the resident withholding tax issue. They were debated though when debate was necessary. They have been spoken about in this House today and in the first and second reading debates. I probably do not need to allude to them again. As I mentioned I think this is good legislation and I commend it to the House. Thank you very much. 
A party vote was called for on the question  
That the Taxation (Consequential Rate Alignment and Remedial Matters) Bill be now read a third time. 
Ayes 112 
New Zealand National 58; New Zealand Labour 43; ACT New Zealand 5; Maori Party 4; Progressive 1; United Future 1. 
Noes 9 
Green Party 9. 
Bill read a third time.