Bridges Simon: Taxation (International Investment and Remedial Matters) Bill — Second Reading 
Text is incorporated into the Bound Volume 
Bridges Simon: Taxation (International Investment and Remedial Matters) Bill — Second Reading 
[Sitting date: 08 February 2012. Volume:677;Page:250. Text is incorporated into the Bound Volume.] 
SIMON BRIDGES (National—Tauranga) 
: 
 The Taxation (International Investment and Remedial Matters) Bill as a main proposal extends the active income exemption introduced in 2009 to offshore subsidiaries so that it also applies to joint ventures and other significant shareholdings in foreign companies that are not controlled by New Zealanders. The active income exemption brings New Zealand’s tax rules into line with the practice in other countries. It will help New Zealand - based businesses to compete more effectively in foreign markets by freeing them from a tax cost that similar companies in other countries do not face. 
 In plain English effectively what this bill does—and I have to say I did not have the pleasure to be on the Finance and Expenditure Committee when this bill passed through it and was considered—is ensure that businesses remaining in New Zealand compete on an equal footing when they go overseas. They are not double taxed. I appreciate there is some simplification in what I say. There are distinctions for example between active and passive income which the Minister has spoken of but we do have a system broadly speaking and we are extending the system so that when businesses here go overseas and face tax costs in their business they are not double taxed here. I think David Parker put it well when he said we are not having uncompetitive tax rates in New Zealand for those overseas interests. Again without having sat on the committee as this bill went through one can see many instances where that would be of benefit to New Zealand businesses abroad whether manufacturing in Taiwan or whether attempting to set up agricultural and horticultural businesses in South-east Asia and the like.  
Can I also just say that on the Finance and Expenditure Committee today we in some ways considered the other side of the coin on this aspect. Russel Norman when questioning the Commissioner of Inland Revenue whilst I disagree with his conclusions made some interesting and valid points I think about our corporate tax rate and whether or not its level is conducive to investment and whether it puts people off. Winston Peters had a very different view and I take a different view again. It is in many ways like a situation with the bear I suppose where you do not want the porridge too hot or too cold. If we have the tax rate too high we are turning off business and if we have it too low we cannot pay for the social services we want and need in this country. But I think what it does show is that robust views on the select committee are to be welcomed that there is room for them and that the Finance and Expenditure Committee will be able to deal with them in a cordial way.  
I come back to the bill. I think it is a good step. David Parker may well be right when he says it is not huge and it is not going to change the world. Nevertheless it does go towards the Government’s programme of making for a more productive and competitive New Zealand economy.