Parker David: Taxation (International Investment and Remedial Matters) Bill — In Committee 
Parker David: Taxation (International Investment and Remedial Matters) Bill — In Committee 
[Volume:677;Page:451] 
Hon DAVID PARKER (Labour) 
: 
 Can I just deal with this issue and ask the Minister of Revenue to clarify a few points around the approved issuer levy—its abolition effectively; bringing the approved issuer levy to a zero rate which is like abolishing it except leaving the framework there. It is not going to be applied. The report of the Labour Party in the minority report from the Finance and Expenditure Committee noted that there was no good evidence that this was going to increase the rate of flow of funds available to New Zealand lenders nor that it was necessarily going to decrease the cost of borrowing in New Zealand.  
Simon Bridges 
: You guys are sticklers for the evidence.  
Hon DAVID PARKER 
: We are sticklers for the evidence Mr Bridges and you know— 
Simon Bridges 
: I told you. It’s a value judgment. 
Hon DAVID PARKER 
: No it is actually an assessment of the evidence that was given. Around the world Governments are running deficits in part because they have hugely decreased the taxation that is paid by the wealthiest of people in the world who move capital around between jurisdictions and somehow manage to avoid paying much if any tax. Given that this was a very small impost effectively upon the rate of return that was being received by overseas lenders into New Zealand the Labour Party is not convinced that the tax burden that was effectively being paid by foreign lenders into New Zealand was wrong. I pay tax. Everyone else in New Zealand pays tax. Why should people who benefit from the New Zealand economy settings not pay tax? They benefit from our police force from the fact that we have an enforceable rule of law and from the fact that we have an educated and healthy population who are educated by a system that is paid for by taxation and who use health services that are paid for by taxation all of which increase the capability of the New Zealand economy to pay the interest that is the reward that overseas lenders in New Zealand receive. I have got no problem with those overseas lenders being rewarded for lending money to New Zealand but I do think there is as good a case for their contributing to the finances of New Zealand as there is for other people. Why zero-rate the approved issuer levy when there was no good evidence that this would have an effect that was measurable on either the available liquidity coming into New Zealand or the rate of interest paid by New Zealanders? I know that we in the Labour Party reached the conclusion that it was just bad policy. 
New Zealand has a multibillion-dollar deficit. That deficit is effectively funded by the Government borrowing money—indeed in part borrowing more money from overseas investors who are being given effectively a lower tax burden through the zero rating of the approved issuer levy. So I ask the Minister to tell the Committee what the evidence is that the approved issuer levy going down to zero percent will either reduce interest rates or increase liquidity into New Zealand. And if there is no good evidence why is it that the Government with a multibillion-dollar deficit is giving up on that revenue? 
There were claims that the approved issuer levy was easily avoided. Well the answer to that is to close the avoidance mechanisms not to reduce the levy to zero. If we were to reduce all taxes to zero—rather than closing the loopholes—just because some people avoid them we would not have a health system we would not be able to pay the police and we would not be able to educate our population. The appropriate response to the fact that the approved issuer levy was not being paid by everyone because there were ways round it that were legal but were known would be to close the loopholes. So I ask the Minister why the loopholes were not closed but rather the easier option was taken to decrease the approved issuer levy to zero—to zero. 
Can I also ask the Minister—and this is an area where I am admitting ignorance or less knowledge than I should have—whether the people who are receiving the approved issuer levy are all paying non-resident withholding tax on all of the interest that is paid to them by New Zealand institutions or whether they are able through the approved issuer levy route to avoid their non-resident withholding tax obligations. Because if they are able to avoid paying non-resident withholding tax obligations on the interest that is paid to them by New Zealand borrowers who are lending money from international lenders—if they are not paying non-resident withholding tax through the approved issuer levy route—then that further reinforces the fact that the approved issuer levy rather than being abandoned completely should have had the loopholes tightened. This would ensure that there is a reasonable return to the New Zealand authorities to help fund the very services that the overseas lenders rely upon in order for them to be paid their interest—that is enforcement of the rule of law education and health services and a healthy economy all of which those lenders benefit from. 
That is the end of my contribution.