Genter Julie Anne: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Third ReadingText is incorporated into the Bound VolumeGenter Julie Anne: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Third Reading[Sitting date: 03 May 2016. Volume:713;Page:10733. Text is incorporated into the Bound Volume.]JULIE ANNE GENTER (Green): As the previous speaker Andrew Bayly pointed out some of the Opposition parties including Labour and the Green Party are supporting this bill and that is because it is relatively uncontroversial. I do think the officials did good work but the changes that it makes are not fundamentally going to change New Zealand for the better. I think that is the story of this National Government—ultimately it does not have the courage to take on the big issues that we are facing in the 21st century. It is not doing anything about climate change. It is not doing anything about reducing growing inequality in New Zealand. It is not doing anything to tackle the housing crisis.In this bill there is a tiny bit that is related to the brightline test which is National’s too little too late measure—a very mini - capital gains tax—which it has tried to use to curb the out-of-control house price inflation in Auckland. But of course there are huge problems with the brightline test bill. This bill implements the residential land withholding tax which is a method of collection for anyone who has little or no connection with New Zealand who buys or sells property within 2 years and therefore has to pay the tax on any profits they make. The real issue is that we do not have fair taxation on property. Anyone who holds on to a property for longer than 2 years will not have to pay any tax on it and that is the reason we have this incredibly unbalanced housing market in Auckland right now where the vast majority of new mortgage lending is going to property investors not to first-time homebuyers.We do have a problem undoubtedly with a lot of foreign capital coming in because there is no restriction on the ability of foreigners to purchase property here in New Zealand. We are going to find out for the first time—after many years of asking for data on this the Government finally acquiesced and realised that we do have to collect data on it in order to understand what the impact is. This is not because we in the Green Party are opposed to immigrants or to people from other countries coming to New Zealand. Obviously as an immigrant I can say that we are absolutely supportive of immigration but having a whole lot of foreign capital coming into New Zealand and bidding up the value of our properties is not good for those people who want to live in New Zealand. That is why we think that the sale of property should be limited to residents and citizens of New Zealand. If someone is willing to take the steps to become a resident or to become a citizen then why not?Of course we should allow those people to come to New Zealand and make their home here but that is quite a different proposition to what is happening at the moment and what is driving up house prices in Auckland. That is a consequence of a shortage of supply which the Government is doing nothing about and it is also a consequence of the fact that our tax laws favour investment in property which is very inefficient for our economy on a number of levels. It is bad for first-home buyers and renters but it is also just bad more generally for the economy for growing a smarter more diversified economy. If we have a lot of people investing in property—just buying and selling each other existing houses—that does not do anything to make us better off.Hon Simon Bridges: Yes it does.JULIE ANNE GENTER: Interesting assertion from the Minister Simon Bridges there that it does make us better off—just a group of people buying and selling houses. It is interesting.The other part of this bill is extending GST to online services and we can agree with that. That is rectifying an uneven playing field so that New Zealand purveyors of services are no longer disadvantaged by online service providers who do not have to pay GST here in New Zealand and that is fair enough. At the Finance and Expenditure Committee we heard a lot of submissions in favour of this change but we also heard submissions in favour of making the changes so the same thing would apply to goods that are bought online—that GST should apply to goods that are being purchased online from outside New Zealand. That is not impossible—many other jurisdictions are doing it. There really is no reason why New Zealand should be lagging behind so far.So we support those aspects of bill—that is the residential land withholding tax which will now apply to brightline test properties that owe tax because they have been bought and sold within 2 years. But in both of these cases this legislation does not go far enough. With the brightline test it should have been at least 5 years not 2 years. Five years is what Treasury recommended. Most other OECD countries have a withholding period of 5 to 10 years. I was just speaking with parliamentarians from France who said their withholding period is 30 years. So you pay tax on your property if it is not your family home and when one buys and sells a property and makes profit on it one has to pay tax. I think that is fair enough. I think that makes sense. But unfortunately this National Government has not shown us the leadership and courage to do what is right in this situation.The final aspect of this bill is enabling information sharing with Australia on student loans. The previous speaker Andrew Bayly also spoke about this. Effectively what the Government is doing here is taking steps to make it easier to track down people who have student loans who are living overseas who may owe us money and look fair enough. People took out a loan; they made a commitment to pay it back. The Green Party disagrees with the student loan scheme. We think it probably makes a lot more sense to invest in education and to have a knowledge-based economy not to load up students with a lot of debt which will make it much more difficult for them to be entrepreneurs to start up businesses and to take risks when they finish their education with this big debt hanging over their head and will make it incredibly difficult for them to buy a house as well particularly if they live in Auckland.This younger generation is seriously disadvantaged compared with previous generations who did not have student loans and did not have out-of-control house prices. We do not support the student loan scheme such as it is but we could understand and accept this particular change that is enabling information sharing. But I would also say that the Government needs to apply this principle much more widely. I mean we would get a lot more money from multinationals that are currently avoiding paying tax in New Zealand if the Government would actually take action on that than we are from student loan defaulters who live in Australia.Speaking of information sharing obviously we have a special relationship with Australia because that is the case with New Zealand foreign trusts as well. With New Zealand foreign trusts we do provide additional information to Australia when the settlor is resident in Australia. We do not even collect the information when the settlor is resident in another country which makes it impossible for us to honour our tax treaties—our double tax arrangements with other countries—because there is no way that a country with which we have such a treaty could ask us for the information about how many New Zealand foreign trusts have a settlor resident in their country who may be using a New Zealand foreign trust to avoid paying tax or perhaps for even more nefarious activities. The total secrecy surrounding the New Zealand foreign trust regime makes it very attractive to those who are involved in criminal activities or who simply want to avoid paying tax. There is no doubt that it is only the ultra-wealthy who are involved in setting up New Zealand foreign trusts in New Zealand. Nobody with less than $5 million would find it worthwhile to do such a thing.So although the Green Party is supporting the bill I came to Parliament because I believe that New Zealand can be a better country. It can be a country that is responding to the challenges of the 21st century investing in smart solutions and a smart Green economy that is actually going to lead to real prosperity for all New Zealanders not just the top 10 percent—the mates of this National Government. We want a fair smart Green economy that is good for everyone and we know that that can be achieved.