Cullen Michael: Income Tax Bill — Instruction to Committee In Committee Third Reading 
Cullen Michael: Income Tax Bill — Instruction to Committee In Committee Third Reading 
[Volume:616;Page:12091] 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 I want to respond to one or two of the matters raised. I outline the fact as Mr Carter will be aware—and I am very grateful to him as one of my predecessors for the work that was started under the previous National Government in terms of this rewrite programme and to Mr Dunne who was also a part of it—that there has been a very clear rule applied by successive Ministers that the kinds of issues the member has raised are not dealt with in the rewrite programme. If we wait to try to deal with every taxation issue that somebody wants to have addressed by way of legislation before we do a rewrite we will never do the rewrite. Indeed a large part of Supplementary Order Paper 195 actually incorporates the last taxation bill passed into the rewritten Income Tax Bill. The purpose of that is to make life easier for taxation practitioners who will have access to one up-to-date full version of the legislation. 
I will just take up a couple of points that the member raised. On the last point as I have said many times to some leaders of business if they want New Zealand to have a lower company tax rate—much lower than Australia’s—they should give me the other parts of the Australian taxation system which they do not want to pay either. For example the Commonwealth of Australia has a 6 percent payroll tax. If we had a 6 percent payroll tax in New Zealand we could probably halve the company tax rate. If we also had the Australian state payroll taxes we could more than halve the company tax rate in New Zealand. That is without counting the capital gains tax the inheritance tax and the various other taxes that Australian businesses have to pay directly or indirectly. Of course New Zealand business wants to just cherry-pick one little bit here and leave all the other bits off. The offer is open; it is on the table for New Zealand businesses. They can come and talk to the Minister of Revenue and if they want to have a really low company tax rate they have to give me the other bits that are paid in Australia. I have to say that in terms of tax design they are not as good as our system is. The design of our taxation is better than Australia’s in that respect. But if that is what is really important to businesses—if that is the teddy bear they want to take to bed with them at night—then they have to give me the little eyes and the funny nose to put on it as well in order to make the thing up and make it look proper when they go to bed with it. 
I will also deal with the issue of films. I am not allowed to know the total tax deduction that the financers of the film not Mr Jackson received. The financiers actually got the tax deduction which is why Mr Jackson may well not know the total value of it—it was not his company that received it. All I know is that when National introduced legislation to remove that taxation loophole by grandparenting the existing provisions—it was then amended by the select committee of which I had the honour to be a member—the Inland Revenue Department advised that the cost of the grandparenting provisions was between $300 and $400 million. The largest part of that is almost certainly in relation to  
The Lord of the Rings 
. When I see the Oscars lined up I see about $30 million for each of them. Will  
King Kong 
 benefit? That film will not benefit from the taxation loophole because it was wiped out in 1999 by Mr Carter myself and various others. But  
King Kong 
 will benefit from the Large Budget Screen Production Grant Scheme which is much easier to control than the taxation loophole I must say in terms of its cost. Probably without the Large Budget Screen Production Grant Scheme we would have  
King Kong 
 without the ape so to speak and without everybody else appearing within the film. [ 
Interruption 
] The start will be the hard bit to do really. I suppose the BNZ building—“Darth Vader’s tower”—is the most appropriate place to do that in Wellington. 
In terms of the banks that matter is all under the existing law and remedial measures are not and should not be part of this bill. If we were to mix up remedial legislation base protection legislation and other changes with the income tax rewrite we would never get the income tax rewrite done.