Copeland Gordon: Taxation (Base Maintenance and MiscellaneousProvisions) Bill — First Reading 
Copeland Gordon: Taxation (Base Maintenance and MiscellaneousProvisions) Bill — First Reading 
[Volume:622;Page:18063] 
GORDON COPELAND (United Future) 
: 
 Outside of the somewhat artificial arrangements we have in this House today’s date is 17 December. Therefore it is the 17th anniversary of 17 December 1987 on which date it was announced rather breathlessly to the nation that we would be adopting a flat tax rate. One of the other messages that was conveyed on that very notable occasion in the Beehive was that charities would start paying tax. Charities had not paid tax since 1601. It was notable from the point of view that suddenly an established position that had gone on for hundreds of years was to be overturned. I am very delighted to report today that the Charities Bill is being reported back to the House and it will confirm going forward the tax-exempt status of charities. 
It is also a very notable date for me personally because the day after those announcements were made on 17 December 1987 I became involved in a rearguard action to try to prevent charities from having to pay tax in New Zealand. I am very very pleased indeed that we won that battle. It has taken a long time. I hope we will see as a result of today’s events the taxation benefits for charities improved. [ 
Interruption 
] I say to Mr Prebble that I look forward to seeing another bill come to the House—sometime next year hopefully—that will create better tax conditions for that very very important part of our society. 
The principal thing that strikes me about this bill is the new rules on thin capitalisation for registered banks. I must say straight away that I was very disappointed indeed to discover that overseas-owned banks operating in New Zealand were not paying their fair whack of income tax. I always look at these positions from the point of view of say nurses who are working long hours in say the intensive care ward at Wellington Hospital to save people’s lives and to improve the quality of people’s health and so on and who pay their fair whack of tax in accordance with our tax laws. Quite frankly I believe that on this occasion the overseas-owned banks working in New Zealand have displayed very very poor citizenship. 
Mr Prebble made the point yesterday that we welcome overseas investment in this country and I do as well. He then went on to say that there was no problem with overseas investors investing in New Zealand because they are the people who abide by the law. Generally speaking I think that is probably true but this is a significant exception to that rule. I am very very surprised indeed—[ 
Interruption 
] I say to Mr Prebble that I have had the advantage of going through what has happened with the banks in this country in the last few years and the way in which they have avoided paying their fair whack of income tax. It is a deliberate attempt to defraud the revenue. It is as simple as that. It has no moral or ethical justification and I am not prepared to come to this House and pretend that it has. 
I congratulate the Government and the Inland Revenue Department on getting hold of this beast which had got right out of control—and it is simply intolerable to have that happening while nurses schoolteachers and others pay their full whack of tax. By the way they have no opportunity to do otherwise—because of the PAYE system they do not get to see the money in the first place. Nevertheless they have earned it. Yet at the same time we have what I would call rather clever but somewhat—I am searching for a polite word to describe them—misguided people in an industry as big as the banking industry in New Zealand deliberately setting out to arrange their affairs in such a way that they do not pay their full rate of tax in New Zealand. So I am delighted that this bill will bring that situation to an end. 
I also want to wish the Inland Revenue Department all the best in recovering the situation that has occurred over the previous years because as we know from various snippets in the press there are also back taxes that are owed by the banks. I understand that negotiations are continuing between the banks and the Inland Revenue Department to address those problems and to see some more— 
Rod Donald 
: What a very soporific speech! 
GORDON COPELAND 
: Thank you. I appreciate the compliment. I say to Rod Donald that on this issue we are in probably in agreement for once which is rather rare. On the other hand I completely disagree with the Green Party when it comes to tax breaks to encourage people to undertake seismic work in New Zealand to find more oil and gas. I thoroughly applaud those moves. I think it is extremely simplistic to come to the House and say: “Why should we bother to encourage people to find oil and gas in New Zealand? After all we have plenty of wind.” It is possible in a logical universe to have wind gas oil hydro and coal as part of the energy mix that drives our economy. To think that we can just somehow sit back and let wind power drive our cars—I mean it blows a lot in Wellington but I have never had my car blown anywhere so there is no chance whatever in Nelson or some other calmer spot in the country. So I think that is extremely simplistic. 
I want to say though that I do agree with one important point that the Hon Richard Prebble made. He is quite right when he says that truth is not determined by popular vote. We need to remind ourselves from time to time— 
Rod Donald 
: That applies to civil unions my friend. That’s why we should not have had a referendum. 
GORDON COPELAND 
: Exactly! I was not going to bring that up but the member is exactly right. Just because something has been passed by Parliament does not mean that it reflects truth in the absolute sense of that word. I believe that such truth does exist. Whether we vote for it or against it it does not alter the fact that it is the truth. 
We need to move on in terms of what the bill does. I think that the deductions for expenditure incurred by businesses in avoiding remedying and mitigating detrimental effects to the environment from the discharge of contaminants is likewise a good move forward. An unfortunate situation has arisen in Mapua where I used to swim at Grosee’s Point right alongside that piece of land. I knew the people who worked there. A situation has arisen there where it is not clear who should be paying for the remedying of such sites and what the tax situation is. Obviously we need to ensure that sites of that sort are cleaned up for the sake of our environment. 
I also took some interest in what Richard Prebble said about the new non-disclosure rules in respect of tax advisers other than lawyers. I think it is very fair and good that the situation that has applied historically to lawyers in this country concerning non-disclosure of information given to clients on their tax affairs will now be extended out to chartered accountants as well. That is a very very fair outcome. I do not know what the mix is but I imagine that the majority of tax advice in this country is probably given by chartered accountants rather than by lawyers. These days there are an awful lot of people who have a BCom/LLB combination so both professions are involved in giving tax advice. I think the new rules concerning privileged information are good. I find it surprising that the ACT party finds some fault with that provision because it actually reduces the police State; it does not increase it which is the claim that was made. Those brief comments are probably enough at this stage. It is a signal that United Future will be voting for the bill.