Willis NicolaNICOLA WILLIS (National): New Zealanders are going to wake up tomorrow to find out that under urgency with less than 24 hours of this bill being in the House the Government has created a new law that doesn't just increase the top tax rate; it gives the Inland Revenue commissioner the power to seek the financial information of every single New Zealander and the Privacy Commissioner hasn't even had a chance to look at it. That is what New Zealanders are going to wake up to tomorrow because of this bill. They need to know that Big Brother is coming and he just got more teeth.So let us go through what this bill actually does because it has three key things that it does. First it increases the top rate of taxation and National has put on the record our objection to that: first we don't think that you can tax your way out of a recession. This is exactly the wrong time to be asking New Zealanders to give up more cash. Second in terms of the purpose which is stated as increasing revenue and increasing equity the bill's own advisers say that there really won't be much progress on either of those things. And third this creates massive issues with the integrity of the tax system. I'll return to these arguments.The second thing that this bill does is that it creates these extensive new information-gathering powers and the third thing that this bill does is it creates a massive new compliance burden for anyone involved in a trust in this country including significant retrospective powers for the Inland Revenue commissioner to ask trusts to provide pretty much any information that the commissioner wants back to 2013.So let's first have a look at these extensive new information-gathering powers because the bill in new section 17GB inserted by clause 33 gives the commissioner for Inland Revenue the power to require any New Zealander to provide information that the commissioner considers relevant to tax policy. This is a broad and sweeping power. Are the members opposite even aware of what their Government is seeking to do because this power means that if the IRD thinks it'd be quite helpful to know how you manage your financial affairs for the purpose of them designing tax in the future all they need to do is invoke 17GB and off they go. This is a huge invasion into the personal financial affairs of New Zealanders. It is such an invasion—it's not just me saying that—into people's privacy that the Attorney-General has issued a section 7 report under the New Zealand Bill of Rights Act to say that it amounts to a breach of our rights as New Zealanders to be free from unreasonable search and seizure it amounts to a breach of our right to be able to freely express ourselves and not to be compelled to say certain things or to provide certain information just because the State thinks it would be useful for the creation of new tax policy. Do not be misled because the Attorney-General who also happens to be the Minister of Revenue has tried to be too cute by half here. He said Oh look my advice to the Minister is you can just fix it up by saying 'Don't worry we won't use the information to prosecute you.' " That's all his little amendment does. But that does not mean that he can't use the power for any range of other things to look into your personal affairs in order to create tax policy in the future.So I have some questions. My first question is: what would the Privacy Commissioner think because we don't know that because there hasn't been any select committee process whatsoever so we haven't actually had the opportunity to publicly engage with the Privacy Commissioner on this. It says in the regulatory impact statement that the Privacy Commissioner had insufficient information about how these powers might be used so was unable to assess it fully but would engage with officials later. Well I think that that is shocking because what we have here is a potentially massive breach of privacy and the Privacy Commissioner hasn't even had the ability to assess it. The New Zealand public is none the wiser. What a disgrace.But the second thing that we need to consider here is that this power is not going to be used by the Inland commissioner just because they think you might've done something wrong—because you know what? Here on this side of the House we think that's fair enough. If you're trying to avoid your tax liabilities then yeah the IRD should have some powers to look into that. But this can be used for any range of purposes so I want to know what the IRD thinks they're going to get up to. What chats have they had with the Minister already about where his particular interests in tax affairs may lie? I mean we know that the Green Party has some pretty wacky ideas on tax as does David Parker probably. So how is this going to be used? I want to know that. We don't know that. We weren't able to take this through a full parliamentary process.Then we have the question of: how many people will end up being captured by this new information-gathering net? How many New Zealanders are going to have their personal financial information asked for underneath this power? Again we do not know—no select committee process no ability to get answers to these questions on the record.Finally what I want to know is: how burdensome will these information demands be because there is no caveat in this bill in 17GB as to what the Inland Revenue commissioner could ask. So IRD could come after you for pretty much every bank statement every financial transaction everything you've ever been involved in and there seems to be no limit to that. So ladies and gentlemen opposite you need to be aware that you have in supporting this bill empowered Big Brother at IRD to go after every Kiwi and select committee hasn't even looked at it.Returning now to the other aspects of this bill that have been more widely telegraphed relating to new sections 59BA and 59BAB these are extensive new requirements for compliance and paperwork from trusts because the Minister has realised as we warned and as we continue to warn that when you create a differential between the top tax rate and the trust rate it is going to be logical that some people will then try and funnel income through trusts. So the response to this is to create massive new compliance requirements for annual returns relating to assets liabilities and distributions.But it actually goes further. It's not just about that differential. It is clear that it's also about understanding and monitoring the structures and entities used by trusts so this information may be used for other purposes in the future. This power is retrospective so this power allows the IRD to go back as far as 2013 to ask people for this additional information or actually to issue a notice at any time requiring trustees to provide any sort of information that IRD may decide in future that they want. So what we can see here is that the Minister has given himself and his department extensive new powers to trawl through the trust affairs of New Zealanders and mark my words new taxes will be coming. This will be creating massive compliance for the 245000 trustees who currently issue tax returns and the many more New Zealanders who will end up being caught in this net.Finally I said I would return to the issue of the increase to the top tax rate. Members in this House have heard National speak about this and I acknowledge that there has been extensive public debate but it is important that we look at some of the high-level claims that have been made by the Minister for this bill because they don't stack up. The purpose of this bill is stated as being a revenue-gathering measure and yet what we know from the official advice that has been tabled is that this tax will get about $550 million in additional revenue a year. Now that's a big number and eyes can glaze over but you need to consider that in the context of the overall public debt that New Zealand is currently taking on. By 2024 we will have taken on $140 billion worth of debt—Hon Michael Woodhouse: How much?NICOLA WILLIS: A hundred and forty billion dollars. Just for those who may not be doing the maths in their head what we're talking here is multiples more than the revenue that will be gained. So this is not going to go in any substantive way to actually resolving the debt and when you compare it on a comparative scale with what could be achieved by more efficiencies across the wider Public Service by the Government bringing in its own belt and cutting its own cloth by the Government for example not having to hire lots more people at IRD to run after your tax information you do need to consider that the revenue claims made for this bill are limited.Second it doesn't actually do much on the distributional equity front. The analysis says the Gini coefficient will only be 0.2 points lower. And finally it does raise massive issues with the integrity of the tax system. I say this: merry Christmas New Zealand. The taxman is coming and he just got more teeth. Thanks Labour."