Goldsmith Paul: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — Second ReadingText is incorporated into the Bound VolumeGoldsmith Paul: Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill — Second Reading[Sitting date: 05 December 2013. Volume:695;Page:15318. Text is incorporated into the Bound Volume.]PAUL GOLDSMITH (National): I would like to thank the previous speaker David Clark for his kind and generous remarks about the work of the Finance and Expenditure Committee which was conducted in a collegial manner as we worked our way through this piece of legislation the Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill.There is no doubt that the tax system in New Zealand is in pretty good shape. I am just looking at the financial statement that the Finance and Expenditure Committee examined this week which showed that the Inland Revenue Department has collectedabout $58.6 billion in core Crown taxes. This is $3.2 billion more than last year and that represents about 27.8 percent of GDP. So there is no question that the Government is a very skilful and indefatigable collector. However this Government has reduced the overall burden while still being on track to return to surplus. This is a singular achievement of which the Minister of Finance Mr English must be very proud. It is worth recalling that tax as a percentage of GDP peaked at about 31 percent in 2006 under that most rapacious tax-gatherer Michael Cullen. We have managed to get it back to a more reasonable level.Of course the driver of tax is Government spending and this Government has made good progress after the blowout during the global financial crisis and after the Canterbury earthquake when core Crown spending peaked at about 35 percent. We are now down to 33 percent and on track to be at about 30 percent in a few years’ time. There is no question that in terms of collecting tax we are very good at it.This Taxation (Annual Rates Foreign Superannuation and Remedial Matters) Bill is the latest piece of tax legislation aimed at making the tax system fairer and simpler and strengthening our economy. The Government aims to raise the revenue that it needs not through hiking tax rates but by ensuring that the existing tax bases are applied fairly are defended stoutly and are updated every year in order to deal with changes to the economy and the way that taxpayers react. An important aspect of fairness in the tax system is that taxpayers must be able to understand and comply with the rules. It is necessary for the tax rules to be cohesive fair and applied consistently.I suppose the biggest area that we dealt with in this piece of legislation is related to foreign superannuation. There is no question that the current settings have been very untidy. We had heard that about three-quarters of people who were liable for foreign superannuation tax were not complying with that liability so any situation like that did require reviewing. The committee went through this in quite some detail. We made several recommendations to improve and clarify the rules—in particular recommending that the rules be limited to taxpayers who acquired their foreign superannuation while they were not New Zealand residents. That makes the new rules more robust and more consistent with the original policy intention.Other changes were introduced to make the rules easier for taxpayers to use. I think the key thing that the committee came up with in the process was how important a good education scheme or set of arrangements particularly with tax advisers is in this area. There is no question that it is a complex area of law. If you are going from one jurisdiction to another the tax complications relating to superannuation are always going to be detailed not just in New Zealand but in any country around the world. I think what we have come up with in this piece of legislation—although it is not perfect and there are certain situations where people are dealt with differently—gives options for taxpayers to deal with being non-compliant in a straightforward way and offers a reasonable mix.The other area is in specified mineral mining. Again the Finance and Expenditure Committee made several recommendations to improve and clarify the rules there—for example a new definition of “operational expenditure” has been included to ensure that such expenditure remains deductible and is distinguished from development expenditure. The committee heard a lot of submissions on that. I think we have fallen in a space that is reasonable to the mining companies that have situations where they are dealing with about 30 or 40 years and trying to project a long way out and wanting to ensure that they are not left with an inability to get expenditure deducted. I think we have fallen in a reasonable space there. On that basis I am very happy to commend this bill to the House. Thank you.