Cosgrove Clayton: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — First ReadingText is incorporated into the Bound VolumeCosgrove Clayton: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — First Reading[Sitting date: 10 December 2013. Volume:695;Page:15383. Text is incorporated into the Bound Volume.]Hon CLAYTON COSGROVE (Labour): I note the—Hon Maurice Williamson: You can’t get better than that.Hon CLAYTON COSGROVE: No judge of character Maurice. Labour will support this bill the Taxation (Annual Rates Employee Allowances and RemedialMatters Bill as we normally do with these annual rates and other matters in respect of taxation legislation going to the Finance and Expenditure Committee.As others have noted much of this bill is uncontroversial. However there are a number of issues that should be examined in detail. I recall being on the Finance and Expenditure Committee for many years when like for all tax bills the Inland Revenue Department would come to us with the classic minor technical amendments. I am sure Mr Williamson’s eyes—with him being both a former Opposition member and also a Minister now—would light up with glee when officials would look at minor technical amendments. They were normally the ones where if you were smart—and I know that Mr Williamson is exceptionally so—select committee members would concentrate in great detail on those matters. How many tax bills do we normally do a year Minister? A couple of tax bills a year?Dr David Clark: Feels like more than that.Hon CLAYTON COSGROVE: As my colleague Mr Clark says it feels like more than that. The reason we do them is that we have some very smart individuals out in the market place who the moment you pass tax legislation find all sorts of wonderful things called loopholes to leap around. That is legitimate. I am not being derisory. That is not illegal tax avoidance; that is working within the rules. Then we need to come back to this Parliament and close loopholes and identify issues that the creative types in the tax and accounting world have come up with to minimise the negative impact on clients and their finances. Governments and Parliaments have to come back and deal with that.It is interesting that around 300 individuals owe over $1 million in income tax. I am mindful that it is—Carol Beaumont: Outrageous.Hon CLAYTON COSGROVE: It is an outrageous figure and I am mindful of this Government in respect of its priorities because we hear a lot about the small end of town. We hear a lot from Ms Bennett about the small end of town and how the Government is going to get tough with those at the bottom of the heap. There was a time that I recall when we took over from the previous National administration when we found that the Inland Revenue Department under the stewardship of one or other of the National Ministers was indeed in tax terms going after the small end of town because the whitebait—the small fish—were really easy to deal with and you could rack the numbers up. I recall that where there were small-business folk who had made a mess-up or a stuff-up in their GST or whatever suddenly all hell would break loose and the Inland Revenue Department would come around formally like the flying squad. There were penalties and interest and those business folk could not dig themselves out from under that trap.By the way I am not talking about folk who were contriving deliberately to break the law. These were—and I used to have a small business a hundred years ago—people who had made mistakes. There was no ability within the tax framework to actually come up with a solution. The default position from the Inland Revenue Department—as mandated to be fair to it by the Government—was to drop the hammer and put those people out of business. In fact I can recall that there was an individual in my patch who was exactly one of those people. His business had got behind in its tax because he had had a bad year. He got behind and he was subject to penalties. He fronted up he did not hide and he got his accountant to come to see me. There were penalties there was interest and there was whatnot. The choice that the Inland Revenue Department gave him at that time—and thankfully it has changed—was that basically it was going to put him out of business. What that would have done is on the unemployment benefit and the Inland Revenue Department would have got—I do not know—5c or 6c in the dollar.That was really fiscally smart because we would have ended up paying out more to those folks who were unemployed.Well we managed to get a bit creative and do what is now commonplace and that is a repayment plan. He wanted to trade out. He wanted to meet his responsibilities as a taxpayer and he wanted to meet his responsibilities to his employees as a business person and employer and trade out. The sword of Damocles was hanging over him because if he missed one payment the interest and penalties would drop on him from a great height. But he was OK with that because he wanted to do the right thing.The point I make is that he was an easy hit. When we hear Ms Bennett and others going after the small end of town what we do not hear from this Government of course is what it is going to do about the 300 individuals who owe a million bucks each in unpaid tax. Oh no no! I will tell you why. It is because those guys have the wherewithal to hide it get around the law and do a number of creative things and they are harder to get. It is harder to extract the tax owed from them from all the labyrinth of elaborate financial instruments at their disposal to minimise their exposure. It is complicated and costly to go after the big end of town. I say to the Government that theft is theft whether it is a hundred bucks from a beneficiary who screwed the scrum as it were or whether it is a million bucks from the guy in the Armani suit down on Queen Street who is illegitimately avoiding his or her obligations. It is theft across the board. I think that is the fairness with which Kiwis would see it. Theft whether it is a hundred bucks or a million bucks is theft from the taxpayer and people should be equally dealt with and made accountable and gone after.But that crew over there on the Government side have their priorities set on the small end of town and on the most vulnerable. That is not to excuse—and I put this on record and I might upset a few on my side—people who thieve from the taxpayers’ purse even if they are down the small end of town. That is not to excuse them. They have obligations in exactly the same way as all Kiwis do. But the priority of this Government is to go after the vulnerable and the big end of town—the boys in theZegna suits—well it will get to them when it can. I would like to see through legislation like this some emphasis to be rebalanced—some priorities to be rebalanced. I would like Ms Bennett to get up with the same vim and vigour as she exhibits when she is so proud of herself and her so-called achievements and make similar speeches about those down on Queen Street The Terrace and other places who may be a part of the 300. That is what I would like to see.But you do not hear those speeches. You do not hear them. It is too hard it is too costly and maybe just maybe they are some of the mates of those 300 on the opposite side of the House. I do not know—I will be charitable—but maybe they are. I do not hear too many Tory speeches coming from that side saying they are going to go after the 300. There is $300 million worth of tax that if recovered could make a difference to a lot of people. I do not know whether the Minister of Revenue to be fair to the Inland Revenue Department is telling his department to make those 300 a priority in the same way as Ms Bennett is out there swinging the axe on those at the other end of the street—the less fortunate and the more vulnerable but those who have an equal responsibility like all Kiwis. I do not hear about too many of those priorities.So I would ask the Minister when he takes a call in the next stage of this bill to tell us what priorities he is demanding of the Inland Revenue Department. Is he focusing on the big game the big fish and the big dollars—which could actually make a material difference—in the same way as his colleagues are concentrating on those who are the easy game? But you do not get as much money from them do you because they do not earn as much money. That is the big difference.So I say that we will support this bill going to the select committee and that there needs to be some real and decisive action about recovering money. I have sat on the Finance and Expenditure Committee—I have been on it for a while—and Dr Clark will rekindle my memory about the student loan bill. An inordinate amount of money was going to be spent by the Inland Revenue Department to put in place the measures in that bill. I know that Mr Hayes in the privacy of the select committee room mind you wrung his hands with frustration—and he knows I am telling the truth about him—and said it was a waste of time. The bill was not going to recover a few million bucks. The Inland Revenue Department was going to spend a lot of money to recover a few million bucks from students. I am not saying that you should not go after that money but again it is an issue of priorities. I know that Mr Hayes wrung his hands—not in public of course—and said basically that the bill was a waste of time. But I will keep his secret from his ministerial colleagues and his mates.I say to Mr Hayes that it would be good if what happened in private such lion-like behaviour and such guts was exhibited in public and in this House. I know he is going to take the next call so I wait with bated breath.