Bayly Andrew; Russell DeborahParts 1 and 2 Schedules 1 and 2 and clauses 1 and 2ANDREW BAYLY (National—Port Waikato): Oh thank you Mr Chair. That was a good contribution from the Associate Minister of Revenue. It didn't quite answer the question as to who called for this. As I said before I'm not aware of anyone who got the old megaphone out there saying We just need to have this information." So that was one point. The second thing when she said you know "People get scared about tax." well I understand why they get scared about tax. As soon as a Labour Minister stands up and talks about tax they're now going to get taxed more because this is what they've done. They've taxed businesses more. They've taxed people more. They've taxed everyone more. No wonder everyone's sphincters start to move when the Labour Associate Revenue Minister starts talking about tax. Anyway I'll come back to the topic.CHAIRPERSON (Greg O'Connor): I'm a little bit worried about your sphincter actually Mr Bayly.ANDREW BAYLY: Anyway—we shouldn't go there Mr Chair. Anyway the other interesting comment the Minister made was that these are well-known principles. Well I've just got to remind the Minister that these are introducing new principles. Interestingly when we talk about tax most people refer back to that well-known person Adam Smith in 1776 when he wrote that famous book The Wealth of Nations. I'm sure the Minister's read it—I'm sure she has; she's got that look about her. It sets out four principles—and I know she's very knowledgeable on tax. The four principles are equity and fairness certainty convenience of payment and effective tax administration. That was written back in 1776 a long period of time ago. We have subsequently had successive tax inquiries—some initiated by Labour by the way. We've had the 1982 McCaw review. We've had the 2001 McLeod review. We've had the more recent 2019 report of the Tax Working Group. In Australia the 2010 Henry tax review. In the UK the Mirrlees report 2011. They have all endorsed the same principles based on the same core values of New Zealand around all those four principles. This bill actually introduced some more. So when the Minister makes that claim first of all I've got to say I'll refute that claim. So I'd just like her to explain why she thinks we are ending up in the same concepts and why this is such a great thing.Hon Dr DEBORAH RUSSELL (Associate Minister of Revenue): I think if I understood the gist of Mr Bayly's question—it was a little hard to tell—but he wanted to know why there were some principles other than Mr Bayly Adam Smith's tax principles. [Holds up book] I'm happy to lend it to you if you like. But some additional ones in addition to Adam Smith. I'm just going to direct Mr Bayly to the 2010 Victoria University's Tax Working Group. Of course that particular tax working group was set up by the former National Party a National Government. As well as having the principles from Adam Smith's The Wealth of Nations in that particular working group they also looked at revenue integrity compliance administration cost and of course coherence. So these are not just new principles that have been introduced by us.We look at the principles that are listed in Schedule 1 of the bill. They are horizontal equity efficiency vertical equity compliance and administrative costs and uncertainty and predictability. Those come to us from Adam Smith and they've been endorsed for a long time and—I was going to say discussed—reinvestigated; there's a whole lot of literature. So we're not reaching back to Adam Smith and Adam Smith only. Tax research and contemporary tax research endorses those principles of Adam Smith. But if we do look at the ones that are new there's revenue integrity which is ensuring that the tax system is sustainable over time. Now that's in the 2010 Victoria University Tax Working Group so that's where that one comes from Mr Bayly as well as from other research. But if you're looking for a source relevant to us that would do the trick quite nicely.The other one that is comparatively new—as in it wasn't in Adam Smith—is flexibility and adaptability. That's quite an interesting one. We found in recent years of course that our tax system was set up to deal with brick and mortar systems and trade systems where trade didn't happen in an instant over the internet. Our contemporary systems don't deal especially well with new forms of commerce. So one of the things we need to start looking at our tax system with and judging it by is just how well it does adapt to or accommodate or can be adapted to meet these new forms of commerce. So I think that flexibility and adaptability came to us—oh I'm not sure but it seems pretty sensible to me. So there you are Mr Bayly."