Smith Lockwood: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Instruction to CommitteeCWH In Committee 
Smith Lockwood: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Instruction to CommitteeCWH In Committee 
[Volume:613;Page:10087] 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 In speaking to the title of the Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill I guess that is a classic example of a title that tries to cover what is in the bill but actually misses the boat quite badly. Let me point out why that is so. 
The first problem with the title is the “Taxation (Annual Rates” bit because the bill does not spell out the rates that people do have to pay. The legislation is very poor at doing that. The Minister in the chair may choose to take a call on this. There are people in this country who pay effective marginal taxation rates that are far higher than this legislation implies. It is kind of misleading to refer to what this legislation specifies in the law as being the annual rates because they bear no relationship to the actual rates some people pay. We will get on to Part 1 which covers the annual rates but it does not really tell us the taxation rates that people face. It spells out a statutory taxation system if one likes. That is why the words “Annual Rates” in the title are misleading. The title implies that this legislation should tell people what they are to pay. The legislation does not do that. Some people in this country face effective marginal taxation rates of over 90 percent on a lot of the income they earn and this title does not give any indication that that is what is going on at all. 
For this title to be a fairer title it should specify “Taxation (Statutory Tax Rates GST” etc. rather than “Annual Rates”. The words “Annual Rates” imply that this legislation somehow gives people guidance as to the tax they pay when it does not do that in any way at all. Sooner or later the Government has to become much more upfront with people about the effective marginal taxation rates they are paying in this country. That is what is implied by annual rates and this legislation does not do that. That is my first concern. I think that rather than the present title of the bill the title should be “Taxation (Confirmation of Statutory Rates” etc. There is a huge difference between the statutory taxation rates and the effective marginal taxation rates that people face in this country today and “Annual Rates” fudges that because it implies that that is the actual rate people pay when it is not. This legislation simply confirms the statutory rates and does not spell out what people face. 
My second concern is this: why just pick the first four issues and then state “and Miscellaneous Provisions)”? That seems to be what the Government has done. I recognise there has to be some limit perhaps to how long a title is but there are other important issues in this bill. OK the confirmation of the statutory taxation rates is the first issue and there are a number of GST issues included in the bill. We have the zero rating of business-to-business supplies of financial services for GST purposes and the reverse charge mechanism to impose GST on imported services. That is all good stuff and it can be covered by “GST” in the title. “Trans-Tasman Imputation” is one very good thing in this bill that the National Party applauds totally and that is identified in the title. 
But there are also one or two other good measures in this bill. Although we are totally opposed to the confirmation of the current high taxation rates the introduction of progressive rates of specified superannuation contribution withholding tax on an employer’s contribution to match the employer’s marginal taxation rate is an important measure in this bill. It is too important to be just covered by “Miscellaneous Provisions”. I think an important provision like that should be identified in the title. So there is another problem. We have a problem over the annual rates not being a proper descriptor and a problem over the fact that the title does not cover something as important as the issue of progressive rates of specified superannuation contribution withholding tax. 
Finally I would also like to add that another important issue in this legislation is the removal of the double incidence for shortfall penalties for attributing qualifying companies and their shareholders. That is an important issue but the title misses it out completely.