Coates BarryTAXATION (ANNUAL RATES FOR 2016-17 CLOSELY HELD COMPANIES AND REMEDIAL MATTERS) BILLThird ReadingDebate resumed from 21 March.BARRY COATES (Green): Tēnā koe e Te Māngai. I rise to speak to the taxation bill. I would say that this is to some extent a misleading title. The Remedial Matters" could instead be called "Late and Inadequate Remedial Matters". We would like to make three points on this bill. It is difficult as a minority party to be in a position of saying that you have serious concerns about a bill yet provide overall support for it but indeed that is our position on this bill.The first point we want to make is a positive one. It is one of the reasons that we are supporting the bill. The bill contains a number of measures that will simplify tax matters particularly for small business. This is important. It will reduce compliance for small business. For the Green Party this is a really important issue. We want to see improved systems to reduce compliance for small to medium sized enterprises and this bill contains a number of important innovations. I would like to highlight one of those. The pay-as-you-go option for paying tax will particularly support the cash flow for small business and having worked in small business many of you may know that cash flow is absolutely king for small business. This is a way to provide small business with a far more even cash flow requirement and a more predictable cash flow requirement and to help their business operations. It also allows payment of provisional tax for accounting software such as Xero and there are 16 measures in all for simplification. We support these measures and as I said this is one of the reasons that we provide overall support to this bill.There is a second issue that this bill is more known for. The bill implements the results of the Shewan review on foreign trusts. I wanted to just refer to the background of this. The Green Party has expressed concern over many years over the provisions for foreign trusts and the degree to which they were making New Zealand complicit in aiding and abetting tax havens around the world. New Zealand gained a reputation as being a place where money could be parked in order to avoid tax. Russel Norman former co-leader of the Green Party campaigned on this issue from 2011 and of course the Panama Papers brought this issue into sharp relief. We had a lot of concern expressed over reputational damage to New Zealand including warnings from the Inland Revenue Department itself from 2012 2013 and 2014 and all of those warnings were not heeded by the Government. As a result New Zealand was removed from the European Union's white list of non-corrupt countries and New Zealand gained a widespread reputation as a tax haven.We recognise the role of investigative journalists and whistleblowers in releasing the information from Mossack Fonseca's files which were revealed as the Panama Papers and then analysing those papers. We were disappointed to see New Zealand featuring strongly in the Panama Papers. We recall that the Government denied that there was ever a problem. There was furious lobbying around that time including by the then Prime Minister's personal lawyer. The Government finally caved in and agreed to the Shewan review. We were encouraged that the Shewan review agreed with a number of Green Party proposals to reform the foreign-trust system.These amendments that are proposed in this bill are the way that the Shewan trust proposals would be implemented through legislation. They provide a register of information that would be given to the Inland Revenue Department both at the stage of registration and subsequently in annual reports. However from the Green Party's perspective this is not a sufficient mechanism particularly I would say because there is no mechanism for ensuring accountability as to what happens to that information. There is no oversight no reporting of that information and no transparency. So we joined with Labour and New Zealand First on a minority report on this issue highlighting these key issues.We need transparency with regard to foreign trusts. Sunlight is the antidote to corruption as we all know. We need a publicly released register of foreign trusts that is searchable. That is the way to be able to ensure that the scourge of tax evasion tax avoidance and tax havens is actually eradicated and certainly eradicated from New Zealand's facilitation of these tax haven activities.We would note that there is a register of companies under New Zealand law. There is a register of other trusts under New Zealand law. We question why there is not a register of foreign trusts under New Zealand law. It appears that this is a case of the Government backing off from a provision that would really add integrity back into our rather discredited system of foreign trusts. There may be exceptions to the publication of full details in the rare case that a publication might cause a risk to individuals—for example from a vindictive regime overseas. However international experience says that although that is often cited as a reason for the existence of foreign trusts when it is actually interrogated it is very very rare in terms of the rationale for foreign trusts actually being used. Far more frequent is the hiding of money from tax authorities.We have expressed concern in our minority report over this crucial issue of foreign trusts. We also joined in the minority report with concern over the delay in phase 2 of anti - money-laundering laws. I would say that it is a great pleasure that finally the second phase of anti - money-laundering provisions are coming to this House perhaps even after this debate because if you look at the data on money-laundering a lot of the money is actually being laundered through real estate. It is having a major effect on speculation and the ramping up of house prices. We will come to those issues subsequently.Finally I would like to note that there has been concern expressed including by the community of accountants over when taxpayer information may be shared with credit reporting agencies. We note that the dollar threshold on when this might apply should be lodged in legislation rather than regulations subject to Orders in Council.These are concerns that we have over this legislation. We do not think the legislation has gone nearly far enough on foreign trusts. We look forward—hopefully soon; maybe even on 23 September this year—to having the opportunity to rectify this lack of transparency on foreign trusts. We would introduce a public and searchable register on foreign trusts that will make sure that New Zealand's reputation for financial integrity is restored."