Woodhouse MichaelHon MICHAEL WOODHOUSE (National): Earlier this week in a speech I did on an ACC bill I talked about the number of pieces of legislation that were coming through this House that were a well-meaning waste of time—that there were a lot of things that were in those bills that did not need primary legislation to enable them to occur. Well I'm going to add this bill to that list with one exception: there's nothing well meaning about this. This is a Petty Picketty Parker" jealousy bill that reveals the envy that he lives with every single day. If he had his way and he got his way with his Cabinet we would be discussing today a wealth tax a capital gains tax (CGT) an "anything to tax the rich" tax because that's the modus operandi (MO) of Mr Parker. And I thought it was really interesting his Freudian slip when he said he intended to say that he wanted to gather real data but actually he revealed his bias by saying he wanted to gather real dirt and actually he got it right the first time—it is dirt digging and it's unfortunate.The other thing I would say about this bill is the word "Principles" is in the bill is in the title. Well this bill is anything but principled; it is mean and nasty and it takes a lens not only into data on the wealthy but it actually interferes with the statutory independence of the Commissioner of Inland Revenue. This part of this Government's MO since they came to office—we can think about the Reserve Bank of New Zealand; we can think about Treasury; we can think about the Police where the Misuse of Drugs Act was changed directing the way police and when police should take prosecutions compromising that very important constitutional separation between the executive and the New Zealand Police. So to that list we can add the Inland Revenue Department who under the Tax Administration Act 1994 has very clear responsibilities for both independence and privacy and they are being undermined by this bill.So let's have a look at these so-called principles—let's have a look at these so-called principles. They include principles for gathering information to establish income distribution and income tax paid. We already know that—we already know that. What Mr Parker doesn't say and is not up front about when he says he wants a tax system that's fair and that he doesn't think our tax system is progressive enough is that he conveniently left out the fact that 20 percent of Kiwis are paying two-thirds of the income tax burden in this country.Chlöe Swarbrick: Maybe that speaks to distribution.Hon MICHAEL WOODHOUSE: Yes exactly. That's right. And I think that is fair and it's also fair that the bottom 48 percent of Kiwis are paying just 8 percent of income tax in this country. I think that's fair too. What's not fair is to release the nonsense reports that he got IRD to do—Andrew Bayly: On unrealised gains.Hon MICHAEL WOODHOUSE: —which takes unrealised gains and says we should tax them. When he was challenged on that on the radio about how an unrealised gain could be taxed and the cash-flow implications of that he glibly replied that when people are worth an average of $276 million they must have some cash sloshing around somewhere that they can pay his unrealised wealth tax that is coming to a campaign near this country.That's what Mr Parker needs to do: he needs to front up and firstly be honest about who is actually carrying the lion's share of the income tax burden in this country—and it is the top 20 percent of income earners and that's appropriate—but to avoid actually reminding New Zealanders of that is I think disingenuous. Then he needs to be upfront about what his intentions and his Government's intentions are for CGT and for a wealth tax because for a Government that insists that that's not on their agenda they seem to spend a heck of a long time talking about it. Although I do wonder quite how much support the Minister of Revenue has from the Prime Minister who actually wants to keep his job. Well I would encourage him to go out and talk about that as much as he likes.Chlöe Swarbrick: Fifty-two percent of New Zealanders want it.Hon MICHAEL WOODHOUSE: Well then 52 percent of New Zealanders should have all of the information about what this Government's intentions are in order that they can make this decision.Chlöe Swarbrick: That's the point of the bill—that's the point of the bill. That's the point of the legislation.Hon MICHAEL WOODHOUSE: No that's not what this bill does. This is another little incremental creep into the lives of the people Mr Parker spends his life being jealous of.Chlöe Swarbrick: It's about data. Come on Michael—it's about data. Don't be so disingenuous.Hon MICHAEL WOODHOUSE: We have the data Ms Swarbrick. Here's the other little hit on the wealthy: the fourth principle in this bill is about compliance with the law by taxpayers as if taxpayers are somehow not complying with the law. Now we know that happens sometimes but when it happens IRD investigate. They've got a very big compliance unit. They go out and they have a look at—for example when I was Minister I think we doubled the size of the unit that went out and had a look at residential property development particularly in the Queenstown Lakes area to make sure that people were paying income tax on the profits that they were making from property development and they couldn't mask their intention on purchase which were the rules in those days and they do a very good job of that. I think we have a very high level of compliance with our tax law. And he was actually at pains to point out when his "famous" report was released that he didn't believe people were evading tax; he just didn't like the tax system that we had. So the Minister of Revenue says "I don't like the tax system—oh but I'm not going to change it. I'm just going to get more reports about it and write more pejorative comments about our wealthy." Well that's a bit like what Norway did Mr Parker and the very very wealthy in Norway—and 10 years ago in France—they voted with their feet and with their chequebooks and billions of dollars of wealth was lost from those countries because of the Parker-like approach that those countries used.Now it is true there are problems and one of the biggest problems is the profit-shifting by multinational countries into tax havens. It's known as BEPS—base erosion and profit shifting—the sort of transfer pricing that is quite endemic actually amongst multinationals particularly those with weightless goods or tech goods and that is a problem to be solved. It was a problem when I was the Minister it's still a problem now and the fact that we haven't been able to make more progress is an indication I think of quite how notoriously difficult it is to create a framework that addresses those issues. Because countries are competitive they do have different company tax rates and companies will naturally gravitate their permanent establishments to those countries. It needs to be dealt with by the OECD as a collective not by individual countries trying to pick those companies off. But it's not going to be solved by this sort of silly legislation which if the Commissioner of Inland Revenue had a mind to do already has the power to report on income distribution to report on distribution of exemptions from tax to report on perceptions of the integrity of the tax system—and we certainly know what the perception of the Minister is on the tax system and it's not a good one—and they certainly ensure that all taxpayers comply with the law. I think we have a very high level of compliance in this country. But simply asking this question in law suggests that the Minister doesn't think that's the case and he wants to lift the bonnet and find out what those nasty tax evaders are actually doing.Chlöe Swarbrick: What are you so scared of?Hon MICHAEL WOODHOUSE: I'm not scared of anything Ms Swarbrick. I just think this is a really really nasty waste of time and here we are in Budget urgency with one of Mr Parker's pet projects.By the way when we come to this in the debate actually on the report-back date I will be asking the Minister to explain why if the select committee is not reporting back until 27 July the bill actually says it comes into force on 1 July this year—seems complete ridiculous but one of the many ridiculous features of this nasty piece of legislation."