Carter David: Taxation (Base Maintenance and MiscellaneousProvisions) Bill — First Reading 
Carter David: Taxation (Base Maintenance and MiscellaneousProvisions) Bill — First Reading 
[Volume:622;Page:18066] 
Hon DAVID CARTER (National) 
: 
 As I rise to speak on the Taxation (Base Maintenance and Miscellaneous Provisions) Bill I am struck by the gall of Dr Michael Cullen which appears to know no bounds. Last night at a quarter to 12—just about on midnight—he dropped in unannounced and surreptitiously tabled yet another tax bill in the House. When will we ever satisfy the insatiable demand from the Minister of Finance for more tax revenue? Dr Cullen is sitting on a massive surplus of $7.4 billion but it is not enough for him. He has been busy with his officials beavering away to see whether there is any more tax revenue he can get out of anybody who operates in this country. The question that needs to be asked is why we need these massive tax surpluses. It is all about next year when Dr Cullen and Helen Clark need the ability to get out there and buy every vote that is around. That is what this tax bill is all about—more money into the tax coffers which is more money then available to Labour to spend with reckless abandonment next year as it attempts to salvage another term in Government. 
The bill certainly deals with the issues of banks operating in New Zealand and whether they are paying the correct amount of tax. Dr Cullen is on record as saying that banks are dodging their legitimate tax burden. I am not in a position to know whether that is true or false. I would have thought it was a matter entirely between the banks and the Inland Revenue Department. I question whether it is appropriate for Dr Cullen during question time even to raise the issue of whether one specific bank is in breach of its own tax arrangements but that is for Dr Cullen to sort out. I certainly acknowledge that the issue is complex. Banks have the ability to structure their affairs so that the amount of money they borrow from their overseas owners creates an interest liability to the bank operation in New Zealand and that can be structured in such a way that may minimise tax. But I am simply not in a position to say whether that is a legitimate dodge. 
The issue is highly complex. I recall regarding talks with both banks and significant overseas companies like for example Microsoft that it was suggested that those large international conglomerates are in a position regardless of the rules established to structure their affairs to be then paying what they see as a reasonable rate of tax. I say to Dr Cullen today that if he puts yet another tax bill to a select committee then those banks and companies like Microsoft will still have their best legal brains poring over any legislation that is finally passed and that they will do their level best to make sure they minimise the tax burden to this country. The issue then is for the select committee to work through what will inevitably be detailed legislation and I wish it well in those deliberations. 
The next issue I raise is the surprising move by Dr Cullen in this legislation to give away some tax revenue. Dr Cullen is adopting the Jim Anderton attitude to tax exemptions and is starting to favour one industry as opposed to another. This bill proposes to exempt overseas-owned companies involved in seismic surveys and offshore drilling. Clearly the Government has finally acknowledged that there are significant oil reserves offshore from New Zealand and that we are not achieving significant investigation from overseas companies in both locating those reserves and then extracting them. We need more oil exploration and I fully accept that. But I question today whether it is appropriate for the Government now to try to signal its desire to see more exploration by in effect giving a tax break. That is what this legislation proposes to do. In that regard we are seeing Dr Cullen who to date has been reasonably prudent fiscally adopting a far more reckless attitude. It is an attitude that we see from his colleague Jim Anderton whereby a Government picks winners in its mind and goes out there with legislation that then gives a tax advantage to that particular commercial activity over and above another. That is a further role that I implore the select committee to look at very closely. 
I move to the third and final point that worries me with this legislation. In two cases that I can see from reading it there is an element of retrospectivity. Dr Cullen has just taken a gasp because he had been hoping that I had not noticed that. But I was sitting in the House till 12 o’clock last night after he had surreptitiously tabled this tax legislation so I had an opportunity to read it carefully. Dr Cullen is proposing to make the significant tax break with regard to overseas seismic exploration and investigation companies retrospective to the beginning of this year—to 1 January 2004. 
Rod Donald 
: That’s terrible. 
Hon DAVID CARTER 
: I am not quite so sure of that but Rod Donald as a member of the Finance and Expenditure Committee should watch that matter carefully. If Rod Donald is particularly concerned about the retrospectivity of that particular aspect of the bill—it goes back to 1 January 2004—let me take this opportunity to tell him that there is a bigger concern he needs to put his mind to. I am talking about the Cook Islands National Superannuation Fund. For a reason that is completely unclear to me that particular fund may now be liable to pay New Zealand tax on its worldwide income. Dr Cullen is equally surprised by that obviously. He is preparing to change the legislation presented to the House today to provide an exemption for the Cook Islands National Superannuation Fund so that it will not have to pay New Zealand income tax on its worldwide income. 
It is surprising—and I implore Rod Donald to listen to this—that if that provision successfully goes through the select committee process it will not be retrospective to 1 January 2004. It will not even be retrospective to 1 January 2003. What Dr Cullen is doing for the Cook Islands National Superannuation Fund is making the legislation retrospective right back to 1 July 2001. We have seen a lot of retrospective legislation brought into this House but I do not recall any legislation being so retrospective as to propose to pass so large a tax break to any particular entity to go as far back as 1 July 2001. 
So the select committee will be busy in the new year. It has a lot of work to sort out. If it needs further assistance I will be only too happy to volunteer to help. But I ask the select committee to look carefully at the significant amount of retrospectivity that Dr Cullen slipped into this legislation in the dead of night at quarter to 12 last evening.