Burns Brendon: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — Second Reading 
Burns Brendon: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — Second Reading 
[Volume:656;Page:5437] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I am pleased to rise in support of the Taxation (International Taxation Life Insurance and Remedial Matters) Bill this evening as a member of the Finance and Expenditure Committee. I note the comments in opening from the Minister of Revenue Mr Dunne about the need in the future to keep tax bills more manageable and I endorse and applaud his comments on that. I also note in response to the comments of Mr Boscawen who has handed me a copy of Sir Roger’s latest tome— 
John Boscawen 
: A bloody good book! 
BRENDON BURNS 
: It is wonderful. It is 112 pages and I compare it with the tax bill we are considering: 824 pages to deal with some tax issues. Would it not be wonderful if life was so simple that we could solve it all in 112 pages? But here is the reality: the mother of all tax bills. That is what life is about. It is complex it is difficult it is hard and we have to have legislation like this to make sure that life can be lived in the 21st century. I am afraid that it is not possible for a 112-page book to summarise everything in life. Also on that point his answer is cutting tax to nothing and deregulating everything. Let us look at the recession we are in and at what has happened in the world. Greedy people who did not want to pay a cent in tax mismanaged the world’s economy and we are all paying the price for that today. 
I acknowledge the role of the chair of the Finance and Expenditure Committee Craig Foss in steering this mother of all tax bills through and colleagues on the Finance and Expenditure Committee. I also acknowledge the work of the Inland Revenue Department—Robin Oliver and others—and also our independent adviser Therese Turner. They gave us good advice. It was a big difficult complex piece of legislation and it is very pleasing to see it back in Parliament beyond the province of the Finance and Expenditure Committee. 
This bill began its life with its first reading in Parliament a year ago this week. Labour supported the bill. It was a Labour bill at the start. We supported it through the select committee process and back to Parliament tonight. The focus of the bill was on reform and on reducing tax costs for businesses. In fact it represented the first stage of the Labour Government’s review of our international tax rules. We were greatly advised throughout the process by consultation with business and its advisers. Most of the reforms were signalled in a series of consultative papers. That was a good process to follow. A lot of further detailed work was carried out. 
The bill is also a reminder to us of the Government’s failure in cutting the research and development tax credit and rolling back KiwiSaver incentives. The connection is that in the last few weeks the Minister of Finance has announced some changes to foreign investment law. Unfortunately those changes did not come before Parliament for scrutiny but it is his right to do that. I am no xenophobe and I do understand what foreign investment brings to an economy but I also have fears about what it can do to an economy. We as a nation at the moment have a current account deficit of $16 billion. That keeps us poor as a nation. Unfortunately about $13 billion of that current account deficit is due to the repatriation of foreign profits and other similar money flows. Our high dependence on foreign investment already is seeing our dollar stay high at about US65c and it is seeing our interest rates stay high by international comparison. What are we as New Zealanders to gain if we make it even easier for foreign investment to flow in to buy New Zealand assets and land? 
We should have kept the KiwiSaver scheme which was a start towards generating more savings. We are a nation of poor savers. We needed to keep that scheme in place but instead it went to fund the tax cuts that took effect on 1 April but 70 percent of New Zealanders were excluded from them. Seventy percent of New Zealanders failed to get a single dollar from those tax cuts because they were on low and moderate incomes and $1 in $3 of those tax cuts went to the super-wealthy. That is inappropriate. It is an appalling consequence of the National Government’s decision to abolish the research and development tax credit which would have assisted us in growing our economy and would have funded the balance of the tax cuts resulting from the abolition of the 2 percent employer contribution to the KiwiSaver scheme. 
I return to the bill before us now. The select committee does indeed consider it vital that tax law be clear and accessible for taxpayers. One has to ask the question when we are still left with an 824-page bill how clear and transparent our tax laws will actually be but that is the complexity of international tax requirements. That is the complexity of matters relating to life insurance and of other matters that this bill tackles. 
I wanted to comment most particularly on a couple of aspects of the bill in relation to the treatment of reimbursements and honoraria paid to volunteers; I am very pleased to see that those came through. I am especially pleased to see the introduction through this bill of a voluntary payroll giving system. I think that is imperative especially in these times. Charities more than most organisations are feeling the pinch of the recession. Enabling people to give from their wages from their salaries on a weekly fortnightly or monthly basis makes eminent sense. The bill will improve the cash flow of charities it will make it easier for people to give because they will not feel the pinch so much and the tax concession for that is available right away rather than people having to wait till they file a return at the end of the year. I think it is a commendable part of this bill. 
I also want to comment that this bill addresses changes in many areas right across the current tax law. It reforms our international tax rules by amongst other things introducing a tax exemption for foreign active income with controlled foreign companies and exempting most foreign dividends received by New Zealand companies from tax. This will allow New Zealand residents with active businesses in overseas markets to compete on an equal footing with their competitors. These are welcome moves. 
The bill also aligns life insurance taxation rules more closely with the actual profits of term life insurance business. It extends portfolio investment entity rules to life insurers’ savings products. It includes changes to the income tax rules for petroleum mining such as ring-fencing deductions for petroleum mining undertaken in a foreign country through a branch. It removes the distinction between onshore and offshore development and introduces a reserved depletion method for deductions. 
The bill is wide ranging. It will amend the Goods and Services Tax Act 1985 which has been referred to previously so that certain loyalty-programme operators can defer the imposition of GST until loyalty points are actually redeemed. The amendments to the Goods and Services Tax Act will allow certain exported foreign second-hand goods most notably metals which were not to be re-imported into New Zealand to be zero-rated if the exporter had claimed a second-hand goods deduction. The bill includes a whole host of remedial amendments. There are numerous changes proposed throughout it. I commend it to the House.