Key John: Income Tax Bill — Third Reading 
Key John: Income Tax Bill — Third Reading 
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JOHN KEY (National—Helensville) 
: 
 National will be supporting the passage of the Income Tax Bill. As the Minister of Finance correctly pointed out it is an extremely large piece of legislation—the largest to have gone through the House. It is legislation that National first started working on in 1994. I think that most New Zealand taxpayers will welcome the opportunity to have—if the bill delivers what we all hope—clear tax law that is written in plain language so that everyone can understand it. 
I want to make special mention of the fact that the bill clearly covers situations where there are unintended consequences. Should there be in effect a change in tax policy as a result of the passage of the Income Tax Bill then the opportunity will be taken to ensure that that is corrected and that taxpayers do not suffer a loss from that particular event. 
I particularly want to mention that National does not support the reaffirmation of the tax rates. I say that because members may have noted in the release of the KPMG world tax survey a couple of weeks ago that New Zealand is out of step with the rest of world. They may have noted that in the survey for 1999 the year in which the Labour Government took office New Zealand ranked well in terms of average rates of taxation in the OECD—the 30 richest countries in the world of which New Zealand is one. In those days we had a corporate tax rate of 33c in the dollar and the average rate in the OECD according to the KPMG survey back in 1999 was 35c. Now today after 4½ years of a Labour Government we still have a corporate tax rate of 33c in the dollar and the average rate in the OECD is 29.96c. We have moved from a favourable position to an unfavourable position and we on this side of the House sadly regret that. 
We know the Minister of Finance’s view on the reduction of taxation of any sort—that it is not something he has been encouraging. In fact since this Labour Government administration has been in office it has raised taxes 17 times in one way or another and has caused the average household now to pay $2600 more than it did. Since Labour has taken office it has taken $1 billion more from businesses and households all across the country every year. It is a Government that is sitting on an operating balance excluding revaluations and accounting changes of $5.6 billion last year yet the Minister of Finance does not want to accept the National Party policy of reducing corporate tax rates. 
I want to take just a moment before we all rush off for our Easter break to quote from Brian Fallow’s finely written article in this morning’s  
New Zealand Herald 
 in which he talked a little about the KPMG tax survey. He included a couple of quotes from the outstanding KPMG tax partner Brahma Sharma one of which I will read to the House: “ ‘The first is that many jurisdictions are competing for foreign investment and while there may be nothing new in that what we are experiencing is an intensity in global tax competition for internationally mobile capital’ he said.” Brian Fallow went on: “This is making analysis of potential investment destinations increasingly sensitive to tax. The other lesson is that globalisation is highlighting weaknesses in the traditional basis of taxation for example the ease within which companies can shift their country of residence and shift the source of their profits from one jurisdiction to another.” 
Not so long ago we saw just how likely it is that that will take place when Air New Zealand had to announce to the Stock Exchange that it was facing a potential liability of up to $107 million relating to its aircraft-leasing business and the tax arrangements structured through its Hong Kong vehicle. That just shows the level and extent to which taxation can and will be moved around the world by companies in order to enjoy lower levels of taxation. The Minister in a rush of blood to the head blurted out in the House a few weeks ago that he was investigating banks. Of course he was not meant to tell the House that in quite that way. After that rather rash moment he rushed back to his department which was fielding calls from all over the show and it hurriedly rushed out a statement— 
Hon David Cunliffe 
: Banks should pay their tax. 
JOHN KEY 
: Well of course banks should pay their level of taxation and we believe in broad-based tax payment; we were just surprised that the Minister in such a rash moment managed to make that statement. I simply make the point that we know that in the global world we live in transfer pricing and low levels of corporate taxation are critical if New Zealand is to preserve its tax base and we wish that the Income Tax Bill addressed that. We also wish that it provided for lower levels of company taxation so that New Zealand companies could enjoy growth and the opportunity to go forward and build a better and brighter New Zealand. 
On that note National will be supporting the bill. But for New Zealanders who long for a day of lower levels of taxation across the board I simply advise them as they go on their Easter break to enjoy time with their families to pull out a National Party manifesto wait 18 months and see all their dreams come true. A National Government will deliver for them what they want. If they are enjoying one of those huge Easter eggs that Sue Kedgley brought into the House earlier may they enjoy it with a nice cup of tea.