Smith Lockwood: Taxation (Annual Rates Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Bill — Instruction to Committee In Committee 
Smith Lockwood: Taxation (Annual Rates Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Bill — Instruction to Committee In Committee 
[Volume:606;Page:4106] 
Dr the Hon LOCKWOOD SMITH (NZ National—Rodney) 
: 
 Part 2 is probably the most offensive part of this legislation. Part 1 which we have just debated is bad enough because it locks into place tax rates on our lowest-income people that result in 100 percent of effective marginal tax rates. But Part 2 does something even worse. Clause 68 sets a favourable tax rate for a proportion of our population based purely on race. Members of the Opposition of many ethnic backgrounds find that offensive. For certain organisations defined as Maori organisations clause 68 prescribes a new tax rate of 19.5 percent. We would have no objection to certain organisations receiving a tax rate of 19.5 percent if a general condition applied—that is if 90 percent of the beneficiaries of an organisation were people on a 19.5 percent personal tax rate. No one could object to that because the ultimate rate being paid by the beneficiaries is 19.5 percent and such an organisation should qualify for that. But that is not what Part 2 does. It picks out only those organisations that are Maori. 
Let me challenge the Minister in the chair to identify just one New Zealand person who under Part 2 could receive the benefits of a 19.5 percent tax rate but is not a Maori person. If the Minister can name one I would be prepared to apologise profusely but as I read clause 68 and the various other clauses in Part 2 the only people who can benefit from that 19.5 percent tax rate are Maori. That is why it is a racist tax measure and why Chen Palmer and Partners argued before the select committee that it was contrary to the New Zealand Bill of Rights Act. If I remember correctly when we tried to get information from the Attorney-General she would not tell us what her advice was on the matter. 
When we have the consultancy of a former Prime Minister and a former leader of the Labour Party telling us that this provision is contrary to the New Zealand Bill of Rights Act we have an issue. What is more we know that the Federation of Maori Authorities has written to the Minister of Finance wanting the decision of the select committee not to allow this special beneficial tax rate to be extended to wholly-owned subsidiaries to be changed so that wholly-owned subsidiaries can get the benefit. That shows that this 19.5 percent tax rate confers a very real competitive advantage on Maori businesses alone. If there are two businesses side by side and one is owned by Pacific Islanders—whose beneficiaries sadly are overrepresented among our low-income people—the Pacific Island business where 90 percent of the shareholders are Pacific Islanders will not benefit from this special tax rate. Only a Maori business will get it. 
National considers that does not confer one standard of citizenship in this country. It is objectionable to most New Zealand people and that is why we are implacably opposed to that provision. We accept there is a problem with the status quo. We accept that under certain circumstances some Maori organisations could be doubled taxed. If they retained their earnings for 4 years before distributing they could be doubled taxed. That is not right either. We accept that change is necessary. That is why we initiated a process to examine this issue but to come up with an answer that confers a privilege—a competitive advantage—based purely on race is simply not acceptable. That is why I challenge the Minister to name one person other than a Maori who under Part 2 could receive the benefits of a 19.5 percent tax rate. If he can do so I will apologise.