Parker David; O'Connor GregTAXATION (ANNUAL RATES FOR 2022-23 PLATFORM ECONOMY AND REMEDIAL MATTERS) BILL (NO 2)Third ReadingHon DAVID PARKER (Minister of Revenue): I present a legislative statement on the Taxation (Annual Rates for 2022-23 Platform Economy and Remedial Matters) Bill (No 2). SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website. Hon DAVID PARKER: Thank you Mr Speaker. I move That the Taxation (Annual Rates for 2022-23 Platform Economy and Remedial Matters) Bill (No 2) be now read a third time. This bill has two legs to it. The first is to confirm the annual rates of taxation for the 2022-23 year which are unchanged from the prior year and the second is a number of improvements to the tax code which improve outcomes for business and taxpayers. I will briefly recap the main measures contained in this bill. Firstly in respect of the platform economy measures the measures in this bill make the competitive field between participants who are running a more traditional business model—it evens the playing field in their competition with those who list their services via the platform economy. The bill proposes that digital platforms be required to collect and return GST on short-term stay and visitor accommodation as well as on ride-sharing and food and beverage delivery services. The reasons for this are simple: it is about equity of treatment and fairness. Often people who sell such services through the platform economy can do so currently without charging GST giving them an advantage over traditional suppliers and this is the same rationale that was used by the prior National Government when they introduced GST on remote services rules that came into effect in 2016. It's probably why when the bill was introduced Nicola Willis the finance spokesperson for the National Party supported this aspect of the bill but then changed that position in a way that I find incomprehensible since because it's just wrong. David Seymour: What does the Minister comprehend? Hon DAVID PARKER: Well I do comprehend that. In respect of these issues the OECD has made the point that as more and more services are sold via the web we must make sure that artifices that are enabled through the web cannot be used to create unfairnesses in the tax system.When consumers contract for services in using these platform apps they're actually buying services from New Zealand service providers. The services are delivered in New Zealand they're using accommodation or taxi-like services in New Zealand and yet because they can construct their contract in a way which notionally at law is a contract in an overseas jurisdiction they can effectively avoid the effect of GST. That's unfair to the businesses that can't do that and the Hospitality Association made strong submissions to the Finance and Expenditure Committee on behalf of their many hundreds if not thousands of members that it's wrong that their members return GST and yet people selling through the likes of Airbnb can evade GST. Similarly I know that the Taxi Federation thinks it's unfair that their members selling services through taxi firms return GST whereas those doing so through the likes of Uber don't. Now there has been some suggestion by the Opposition exaggerating the effect of this on prices. They have at one stage said that prices would go up by 15 percent because that's the rate of GST. That's incorrect because it is only effectively the net amount of GST that would be collected from an industry like that after allowing for GST input costs. That is recovered from the platform economy and that's less than half of the total—around 6 percent we think. In respect of the local businesses competing against these large often overseas-based digital platforms they welcome this change and it will improve both the tax system and the small businesses mainly in New Zealand who face unfair competition currently. This will also ensure that New Zealand has access to information from overseas counterparts which is one of the requirements of the bill. The Government also wants to reform the GST apportionment rules to improve fairness and make them less onerous and less complex for businesses—particularly smaller ones—to comply with them. There are various remedial measures in the bill to that effect. It's part of the Government's general commitment to reducing the complexity of the tax system where appropriate. There's also modernisation and greater flexibility in relation to the rules applying to the tax treatment of cross-border workers. It's a very technical area that the select committee considered well and I won't go into it. It essentially does this by clarifying how the PAYE withholding tax fringe benefit tax (FBT) employer's superannuation contribution tax and non-resident contractors' tax rules apply. There's also a proposal aimed at producing a more neutral fringe benefit tax outcome between the options of travelling to and from work by car. At the moment employers can provide car parks to their employees at significant cost but there's no FBT on that. The last National - United Future - ACT Government did actually try to fix that but there was a bit of pushback and they didn't pursue that any further. We agree that that leaves an anomaly where employers who would be subsidising more climate-friendly alternative forms of transport were liable for FBT. That's not right and we've fixed that by enabling employer-provided public transport fares that are subsidising travel by commuting to and from work to be free of fringe benefit tax. This was a recommendation of the Tax Working Group and it is something I know that the Greens and the Labour Party have championed for a while. We've also adopted late in the piece a recommendation from Julie Anne Genter and the Green Party that that FBT exemption be extended to include subsidies for bicycles electric bikes scooters and electric scooters. There's a regulation-making power to make sure that that can't be abused by purchasing gold-plated scooters or bikes. The bill also proposes to exclude build-to-rent assets from the interest limitation rules in perpetuity. Nicola Willis: Just exempt all housing as has been the convention for 30 years. Hon DAVID PARKER: So we've just had an intervention from the National Party which explains what they will do if they're elected. They will restore the ability of landlords to deduct interest in full to enable landlords who have vast or large property portfolios to borrow 100 percent of the costs of their next home purchase driving up the cost of existing homes and excluding the people who live in those homes rather than rent them out as landlords. We don't think that's good policy in New Zealand. We think it's distortionary and we think that we should instead be encouraging investment into new housing where you get full deductibility now in perpetuity. The Government is also aware that businesses are responding to recent North Island floods by providing benefits to their employees in affected areas. We don't think it would be appropriate for those benefits to incur income tax liabilities for the employee or fringe benefit tax obligations for the employer and therefore the bill proposes exemptions for cash and non-cash benefits provided by employers to employees who have been adversely affected by the North Island flood event up to a maximum of $5000. It provides that accommodation benefits provided by employees to employers for up to eight weeks after the start of the relevant flood event are similarly treated so that people can go and help out without creating some tax complications and that the accommodation benefits of those employees who relocate to the affected areas for a limited duration for rebuilding and recovery projects aren't adversely affected by tax consequences. Those are some of the main features of this bill. These matters are important for New Zealand and I thank the House for its consideration of these matters as I commend the bill to the House. DEPUTY SPEAKER: The question is that the motion be agreed.