Adams Amy: Taxation (GST and Remedial Matters) Bill — Second Reading 
Adams Amy: Taxation (GST and Remedial Matters) Bill — Second Reading 
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AMY ADAMS (National—Selwyn) 
: 
 I rise tonight to take a call on the Taxation (GST and Remedial Matters) Bill. However like the member who has just resumed her seat I could not in all good conscience speak about tax in the House tonight without taking a moment to reflect on the tragedy that has happened in the country today. I know it has been mentioned before but having spent the last 3½ hours now I guess watching coverage as it came out of Greymouth I think everyone in the country is focused on things that are far more important and immediate and real to us than the passing of taxation legislation. Like the member from the Maori Party can I take just a moment to express my extreme sorrow and heartbreak for all the miners their families and the whole community. It is a devastating thing for them to be going through. 
We are however continuing here in Parliament and this evening we are in the second reading of the Taxation (GST and Remedial Matters) Bill. As a member of the Finance and Expenditure Committee I have had a chance to get to know this bill and work on it as it progressed through the select committee. One of the things that has become more apparent to me as I have sat on the committee is that tax—however inherently dull dry and unappealing it is to those of us who do not live and breathe it as an occupation—is actually a dynamic growing and living organism. One of the things I think we can all say quite safely is that leaving aside policy changes we will never have the perfect tax system. I do not think we will ever be able to say “You know what? We have done it now we have knocked it off it is sorted just don’t touch it it will be fine.” Tax is something that is very biotic almost. It is growing it is breathing and day by day we are learning ways to improve it to make it better. This bill is a good although small example of the things that can happen in that space. 
The GST system which the majority of this bill focuses on—it is not all of it—is widely commented on internationally as being an excellent taxation system. Its simplicity its ease and the way it is applied is often the subject of a lot of positive commentary around the world and that is something we should be very proud of. But harking back to the comment I just made that is not to say that we have a perfect system by any stretch. 
This bill sets out to do a couple of things that we should always be mindful of in the tax system. One of the things we must do is to identify and close down areas where people take advantage of tax law. We have heard both Mr Nash and Ms Katene speak of the phoenix transactions that this bill addresses. I have to say that they are not something that I have been aware of in my practice as a property lawyer. I am very pleased to say that I do not think any of my clients would partake in that. I certainly would not have been part of it if I had known it was going on. But clearly it is an issue and it is one that the Inland Revenue Department has identified and having identified that loophole it is incumbent on the department and on us to do what we can to shut it down. What we do know is that the vast majority of New Zealanders are working hard paying their taxes and contributing. There is not a person in this House who would not support jumping on any New Zealander who seeks to avoid paying taxes and who exploits the tax system for their own financial gain. 
So this is a situation where these evasion schemes have been identified. They are nothing more than a way to rort the tax system to take money from the Crown from the consolidated account—the wealth that belongs to every New Zealander—that they are not entitled to. So there can be no other response than to support a way to crack down on those practices. Having said that as a committee we certainly did not want to say “Good as gold you’ve got a problem whatever you think is fine with us.” I think the committee can be righty proud of its work. We certainly worked on a multipartisan basis—there was no politics in this—to ensure that while we addressed what we needed to crack down on we did not to the best of our knowledge and certainly the best of our intentions do it in a way that would create further problems or perhaps overreach. That has been an issue in the past. 
In addition to closing loopholes the other part of that continual process of evolution of this living breathing thing that we call the tax system is working out ways to make it a bit simpler and a bit easier to understand. I know that the Inland Revenue Department is working on the results of  
Making tax easier: A government discussion document 
 
and I support it in that because tax is not a simple thing yet we need it to be simple—so there is a continual tension there. Some of the changes that the department through the Minister of Revenue has brought to this House will not set the world alight but they are commendable because they do that exact thing—they try to identify areas where there has been a lot of confusion or where it is hard for taxpayers to know what their obligations are. The department has tried to identify and address them and make them clearer. 
We have issues around where assets are used for both taxable and non-taxable purposes. We have issues around the definition or a line between the use of residential accommodation and commercial accommodation. One issue that is a bit more meaningful to me in the property law game is around the GST rules where properties are bought through nominees and there is a subsequent nomination of an eventual purchaser. This bill makes it very clear from the outset how GST will apply in that situation. This stuff is not about massive policy changes of direction. It is just about making a very simple clear easy-to-understand set of rules so that people going into transactions can understand and know what their obligations are up front. 
If there is a theme that I am always harping on about at the select committee it is about the obligation of the department to make the rules as easy to understand and as up front as it possibly can rather than an ambulance at the bottom of the cliff approach. I am always very happy to see them working with supporting legislation which encourages us to clarify areas where there is confusion. I want New Zealanders to get their tax right the first time. I do not want them spending a lot of money on lawyers and tax accountants and disputes with the Inland Revenue Department when they are not deliberately trying to rip off the system. The aspects of this bill that address that are certainly directed in that regard. 
The other matter I want to touch on reasonably briefly in this contribution is a matter that the select committee spent a bit of time on. It is the issue of the powers of the Inland Revenue Department to take money from joint bank accounts. There is an inevitable tension here. We want the department to have the power to recover tax owed and to stop people from being able to deliberately avoid the payment of their taxes in their contribution to the running of this wonderful country. Equally though we have to be certain that we do not allow the department to operate in a way that has unfair consequences to other parties. At the select committee we were very concerned about safeguards and how they would work when we are allowing the Inland Revenue Department to help itself to money from joint bank accounts. 
We spent a lot of time discussing that issue and I acknowledge the Hon Roger Douglas who was very concerned about this point and was the originator of the concern of the committee. How do we ensure that the department’s authority is appropriately exercised? One of the examples that did concern us was the situation for example of a business partnership. A joint bank account can be a lot more than a cheque account for a husband and wife or for mum and dad. It could easily be as it was in my case for many many years a case of legal partners operating in partnership through a bank account. It did not seem appropriate to us that money could be taken out of that account to satisfy the personal tax liability of one partner without the knowledge of the others particularly where the extent of that partner’s share of the bank account could be considerably less than their amount of the debt. So they could be a 1 percent partner yet the whole of the account could be subject to seizure. That was an issue that we put to officials on a number of occasions and on more than one occasion we asked them to come back to us to make sure we got it right. I pay tribute to them. I think they worked very hard to recognise and satisfy the committee’s concerns in that regard. 
As I said at the outset who would want to be thinking about tax at a time like this when the country is dealing with what it is dealing with. But for all that we do have to carry on in this House and I think there has been widespread support across the House for the Taxation (GST and Remedial Matters) Bill. That is as I would expect because it is in essence about ensuring that New Zealanders are not ripping off the tax system and ensuring that good New Zealanders find it as easy as possible to get their tax affairs right the first time every time. That is certainly something that we can all support. I commend the bill to the House.