Cunliffe David: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — First ReadingText is incorporated into the Bound VolumeCunliffe David: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — First Reading[Sitting date: 11 June 2013. Volume:691;Page:10986. Text is incorporated into the Bound Volume.]Hon DAVID CUNLIFFE (Labour—New Lynn):I am pleased to take this opportunity to say that the Labour Opposition will be supporting this Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill the maiden bill of the new Minister of Revenue the bright and shiny Todd McClay who has got up early this morning to come to the House to read the speech that one of his officials has clearly written for him and we compliment the officials for their excellent work in that regard. What a fine start he has made! He has gone where Jonathan Coleman did not go and he has actually picked up the right speech notes and read the right speech. What a brilliant start! I have to say that the member opposite was a pretty decent chairman of the Finance and Expenditure Committee and we wish him well for the 2 or 3 weeks that it takes for us to bring his ministerial career to an end.Why is he here? Why is he here? The answer to that is very very simple. It is because the Hon Peter Dunne is not here. Why is the Hon Peter Dunne not here? It is because he is no longer a Minister. Why is he no longer a Minister? Well he assured the Finance and Expenditure Committee that he did not leak sensitive Government Communications Security Bureau documents to a journalist. He gave a point-blank assurance. Unfortunately when he gave the same point-blank assurance to the Prime Minister the Prime Minister said: “Well I’d love to believe you but you’re gone.” So he has gone and Todd McClay is here.That will be a very interesting ride for him because he has got his work cut out. While Peter Dunne was busy thinking about matters of the ether the revenue portfolio was going to rack and ruin before his very eyes. Todd McClay has got a huge job to tidyup the portfolio before it unravels. Nit-picking taxes like the car-park tax like the iPad tax—imagine applying fringe benefit tax to the personal use of computers or cellphones. The cost of working out which calls were private and which were public would have been far more than the tax was worth. What about applying fringe benefit tax to car-parks for shift workers or only for businesses in the central business district but not two streets further over? Those are the kinds of bizarre tax ideas that emanated from the Inland Revenue Department from the previous hapless Minister—hopefully not under this hapless Minister.They were withdrawn under pressure from the Labour Opposition from labour unions from business groups and it has caused a great deal of push-back because we all know that the word went out from the Minister of Finance’s office to the Minister of Revenue and to the Inland Revenue Department officials and it went something like this: “If it can get $5 million or more for God’s sake tax it because we are desperate to get to a Budget surplus and we will use any tool in the tool box to get there real or imagined.” In the Budget debate we uncovered the fact that so many of the fiscal and revenue tools being used by this Government were straining credibility were in the realm of the fictitious—like a $400 million tax spike in the year 2014-15 alone due to the magical appearance of some redeemed tax credits or a $1 billion spike in corporate tax revenue or a $1.2 billion spike in personal tax revenue. So the Minister is going to have to establish some credibility pretty quickly to tidy up those kinds of rubber numbers that have infected the fiscals.The Inland Revenue Department’s mainframe computer system is in tatters and the officials have recommended an open cheque book of $1 billion to $1.5 billion to rebuild their pet computer. Well it is important. The Labour Government that is coming in will have to fix it up too. But we will not be writing a blank cheque to the officials for a billion-dollar computer. I have no idea how you could pay a billion dollars for a computer. Let me just say that Cabinet and the outgoing honourable Minister were so unsure of themselves that they had to build in a teeny-weeny contingency margin. How much? It was $500 million of contingency margin. So on his first day in the House as Minister of Revenue I say to the Hon Todd McClay to get out your pencil get out the ruler and measure up that $500 million grey area and fix it up because we are going to be coming after it. If you do not fix it Minister we will be coming after you.While we are on it the time is now Minister that you should be worrying about the erosion of the tax base. Please do not do what the Hon Peter Dunne did and say: “Look we know multinational companies are laying waste to our tax base by shifting profits across internet sales. We know Google Apple and the other multinational giants are really hard to tax but don’t worry the OECD is working on it.” Well the OECD is doing good work and we commend that. We would agree that we should be participating in it. But here is the difference. Those clowns over there are happy to wait for Paris to do something in the springtime. We are not. We are saying that the Government is negligent if it does not pursue domestic initiatives in parallel. For example the Labour Opposition is actively looking at the issue of the threshold for GST on purchases online of foreign-sourced goods because that is creating an incentive to disembowel the New Zealand retail sector and that needs very serious consideration. But base erosion and multinational taxation cannot wait for some thinktank in Europe to get its act together in 3 or 4 years because hundreds of millions of dollars of New Zealand revenue is at stake in the meantime.While we are on that theme and following the Minister’s maiden recitation of what the officials have given him let me mention two mega issues that revenue must play a part in. The first is the growing inequality of income in New Zealand. There is a little thing called the Gini coefficient and it measures the difference between the 20thpercentile and the 80th percentile and the gap is getting wider. There are some revenue purists who say that people should never consider the role of the tax system in income distribution and I say “Bunkum!”. Tax is always a matter of revenue redistribution and the Government’s major tax steps in this term of Parliament were to take from the poor and give to the rich in an iniquitous tax switch that gave 40 percent of the winnings to the top 10 percent of income earners. It is still the case Minister that three-quarters of the wealthiest 100 New Zealanders are not on the top tax rate. They declare an income of $70000 or less per annum and that is a national scandal. So if you want to pay for food in schools and if you want to pay for roads of national significance do your job and make sure all New Zealanders pay their fair and legal share of tax. Do not turn a blind eye just because they are your big-business mates—not you Mr Deputy Speaker the incoming honourable Minister.This bill is a small part of the tax work programme. This bill is a useful step forward in clarifying the superannuation rules. We have no dispute with the objective of this bill. I will however mention several factors that are very important in its construction which we will be looking at in the Finance and Expenditure Committee. The first is that by the Minister’s own admission the mining sector has had a free and advantageous run in the tax system. This bill goes some way towards re-equalising that. Does it go far enough? Well that will be a very interesting question to test.This bill tries to simplify the taxation of foreign-held superannuation funds for New Zealand residents and in doing so it looks at imputation credits and Australian dividends. It uses the fact that there is a double tax treaty to convey a particular exemption for our Aussie mates. Well that is very good but when is this Government going to do something about the fact that the New Zealand corporate sector is being rorted by the Australians over the non-convergence of the taxation of corporate dividend imputation? Why is the Government sitting on its hands while there is a tax advantage to Australian business over New Zealand business that it has been unwilling or unable to negotiate a solution to despite the urgings of the Productivity Commission? We will ask whether that issue can be picked up in this bill. Whether the bill makes sufficient difference between contributory and non-contributory schemes whether it addresses the interpretation of KiwiSaver and other portfolio investment entities and how it interfaces with the broader foreign investment fund rules are all second-tier issues that will merit the select committee’s consideration. But today for now in this maiden speech of the bright and shiny new Minister who unfortunately inherits a very non-bright—