McNair Craig: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — Second Reading 
McNair Craig: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — Second Reading 
[Volume:621;Page:16402] 
CRAIG McNAIR (NZ First) 
: 
 New Zealand First will be voting against the bill for a few main reasons. We have some concerns that go to the very foundation of this legislation. New Zealand First has always had the philosophy that we will support legislation that is good and oppose legislation that is not quite as good. I like Rod Donald disagree with giving certain non-residents a tax advantage on profits from the sale of shares in unlisted New Zealand companies because it disadvantages New Zealand resident venture capital investors and undermines the tax base to a certain degree. Even John Key pointed out that it would still not attract the appropriate capital needed for the purposes and reasons for which this part of the legislation was created. So that is one reason but there are many others that I do not have time to go into. 
I want to touch on Part 1 “Annual Rates of Income Tax 2004-05” in terms of inflation adjustment for personal marginal tax rates. The Labour Party will have to face the fact sooner or later that it told the electorate in 1999 before being elected that the highest marginal tax rate would affect only 5 percent of the earning community. 
Hon David Cunliffe 
: Which it did. 
CRAIG McNAIR 
: Which it did then but I am telling the Associate Minister with respect that the threshold has expanded. Some people argue that it is not quite 20 percent; that it is around 18 percent or maybe 17 percent. Whatever the figure whatever side of the argument one is on the percentage has expanded and sooner or later the Government will have to address this matter. That is all I am going to say to the Government and the Minister. 
While I am on that subject I note that the United Future member Gordon Copeland has put in a Supplementary Order Paper and we will be supporting that. I am interested that United Future has put in a minority report on the bill. I do not know whether it will be voting against the entire bill although this issue is quite a major part of it. New Zealand First supports the notion that in order to preserve the present tax thresholds in terms of purchasing power the present tax bands should be expanded from $9500 to $10750 from $38000 to $43000 and from $60000 to $68000. That issue forms a pretty major part of the bill and I will be interested to hear what that member has to say as far as supporting the entirety of the bill is concerned since his party has put in quite a lengthy and I must say substantial minority report. I thank United Future for doing so. 
In talking about income tax and confirming the annual rates of income tax as we are in this bill I believe that this country faces an even greater problem. I have mentioned the issue in the House before but I believe it needs to be addressed again. Instead of thinking that a lowering of the rate of income tax is the answer to all our problems as some in this Chamber believe we should be looking at other alternatives as well. We need to be looking at tax incentives for exporters. If one looks at Singapore—and I do not want to spend any time on this because it is not directly related to the bill—one will see that that country exports around $60000 per man woman and child. Ireland exports around $40000 per man woman and child but New Zealand exports around $8000 per man woman and child. I think right there our Government needs to say: “OK we must provide tax abatement and concession policies to ensure that viable exporting and innovation opportunities are not lost.” For example a 20 percent tax rate on new export net income would be a great start. 
If we are to protect our nation’s tax base then we ultimately need to reform the taxation system by simplifying tax processes clarifying tax legislation ensuring that the taxation laws of New Zealand are upheld and ensuring that all companies large or small pay their taxes. 
 Another issue faced by this country and the Minister of Finance and the Associate Minister sitting over there is that our big banks sadly are owned by foreign enterprises. One of the biggest tragedies of our nation is that our big banks are owned by Australians mostly and only a very small percentage such as Kiwibank and the Taranaki savings bank are New Zealand - owned. That is sad enough but the foreign-owned banks are not paying something like an estimated $360 million in tax. I know we are going through a process to correct that which is great. Hopefully we will get more New Zealand - owned banks in the process as time goes on. While I am on the subject New Zealand First’s long-term objective is for New Zealanders to be paying less tax. As a Parliament we need to remain opposed to any increase in general taxation so supporting Gordon Copeland’s Supplementary Order Paper would be a good start. 
There are positive aspects to the bill. I want to touch briefly on dispute resolution. Last year we focused a bit on that and we do need to improve the legislation every year. This bill amends the framework for resolution of tax disputes between the Inland Revenue Department and taxpayers. The amendments to the bill follow on from a discussion document about resolving tax disputes. A report on a legislative review was released in July 2003 and the three main stages are intended to ensure that all relevant evidence facts and legal arguments are explored before a case goes to court and are essential to the disputes resolution process. I do not think the House wants me to read them out verbatim. I think the House knows exactly what I am talking about. It is a positive move that new section 89N inserted by clause 84 prevents the commissioner in cases where a dispute has not been resolved between the parties from amending the assessment without first completing the disputes process. 
There is one other issue and we talked about it at some length in the Finance and Expenditure Committee. Last year the House enacted the Taxation (GST Trans-Tasman Imputation and Miscellaneous Provisions) Act which allows employers to use accredited intermediaries to assume the employer’s PAYE obligations. This bill includes several small amendments to those rules to improve the operation. 
New Zealand First is opposing the bill.