Hayes John: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — Second Reading 
Text is incorporated into the Bound Volume 
Hayes John: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — Second Reading 
[Sitting date: 02 August 2012. Volume:682;Page:4281. Text is incorporated into the Bound Volume.] 
JOHN HAYES (National—Wairarapa) 
: 
 I sense that that last speech in the House was delivered by somebody who aspires to be the deputy leader of New Zealand First. When I hear people constantly using phrases like “shifting the deckchairs on the  
Titanic 
” “tinkering around the edges” and “own goals” these are just euphemisms because the speaker does not understand the bill against which they are talking. It is unfortunate that the member was not involved on the Finance and Expenditure Committee at least to my knowledge so unlike his actual leader he is not as well versed in the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill. He hides his lack of understanding in these glib clichés. 
I feel that it is a little bit important to explain something to that member about the issues around taxation. If you have a perfect market think of it like a supercomputer network. It has sensors in every part of the economy. They reach into brains—even small brains—and they read our desires. Constantly the market is re-optimising production and allocating resources perfectly. But efficiency is not enough to ensure a fair society. If Bill Gates has got all the money then the rest of us starve. We need to do something to improve the efficiency of our economy so Mr Williams we have things called taxes. They are inefficient but we need the money to spend on things like health police schools and roads. But taxes are inefficient because the market price no longer equals cost and cost no longer equals value so the Government faces a dilemma. We want to avoid inefficiency because we pass up the chance to make someone better off at no cost to anybody else. Most of us want to use taxes to move income from rich to poor. 
The Government needs and attempts to make the economy both efficient and fair and underlying this bill is a drive to do that. Under a Labour Government supported by New Zealand First and the Green Party I think New Zealand would have first of all a capital gains tax—Labour promised that in the last election—on all businesses and farms which would penalise our productive industry and would add to inefficiency. We would see more than a doubling of employer KiwiSaver costs Mr Williams. We would see a big gap between the company rate and the top personal rate which encourages tax avoidance. 
We have been through this bill on a first reading and the changes between the first reading and the second reading can be summarised like this: the changes in this bill are in addition to the biggest tax reforms in the last 25 years which are helping families to get ahead. They are boosting growth to create jobs and to lift incomes they are encouraging savings and investment and they are making the tax rules fairer for all New Zealanders. We have moved from a situation that we inherited from the last Labour Government where people were spending $1.11 for every dollar they earned to the position that we are in now where we are spending only 98c for every dollar we earn. 
We have built a more competitive tax system that is tilting the economy away from borrowing and spending—which is what the Labour Government would do if it came back; it would borrow and spend—towards savings and investment. 
Hon Clayton Cosgrove 
: You’re borrowing $300 million a week. 
JOHN HAYES 
: I know Mr Cosgrove that you blithely got rid of $7 billion as Associate Minister of Finance—$7 billion—but we are trying to move this economy towards savings and investment. 
This bill will produce a simpler and fairer tax system that rewards hard work and protects the vulnerable. Across-the-board tax cuts instituted by this Government already are rewarding hard work and delivering more money to New Zealanders to every New Zealander— 
Andrew Williams 
: For the wealthy. 
JOHN HAYES 
: —whether you are working or you are retired Mr Williams. Two-thirds of the cost of the income tax cuts went into reducing the bottom two tax rates. About three-quarters of earners as Paul Goldsmith said are paying no more than 17.5 percent personal income tax. We cut the company tax rate— 
Andrew Williams 
: What about the paper boys? What about the paper girls? 
JOHN HAYES 
: —by 28 percent ensuring that New Zealand businesses remain competitive. A family with two children Mr Williams can earn up to $50000 a year and effectively pay no tax—no tax—when Working for Families is taken into account. After-tax wages are increasing faster than prices under this Government and we have taken steps to tighten up property tax rules by eliminating depreciation removing the loss attributing qualifying company rules and improving Working for Families integrity measures. 
Since the first reading this bill has been revised a little bit since last September. The two main income tax forms for individuals—the IR3 and the personal tax summary—will no longer be amalgamated. Instead existing practice will continue because the initiative would have put a lot of pressure on officials from the Inland Revenue Department and their ability to undertake further systems changes. The bill has been changed to contain a proposal to require individuals who choose to file for a particular year to also file for the previous 4 years. The application date for this proposal is to be deferred from the 2014-15 income year to 2016-17. However the implementation date can be set earlier by Order in Council. 
The bill also clarifies that the 4-year rule applies from the most recently ended tax year—[ 
Interruption 
]—rather than from the year for which an individual chooses to file. I know this is difficult for you Mr Cosgrove but then that is the lot of a list MP who has no constituents to look after. Tax debts from the previous years under the 4-year rule will not incur the use of money interest or penalties from the previous due date; a new due date will apply instead. Credits and debits arising from the 4-year rule will be used to offset each other Mr Cosgrove. 
Hon Clayton Cosgrove 
: It’s not necessary to read the bill from cover to cover John. 
JOHN HAYES 
: These are the changes. I am not reading the bill; I am describing the changes that were introduced from the last drafted bill to this one. 
 The application date and savings provision for the proposal to charge GST on late payment fees is going to be deferred from April 2012 to January 2013. 
Andrew Williams 
: When are you going to be a Minister? 
JOHN HAYES 
: I know that you did not understand that Mr Williams but GST will not be charged on late payment fees if the underlying supply is exempt. Other changes to the GST provisions have also been made such as clarifying the definition of land where new apportionment fees for zero-rating supplies can be used. Finally the foreign investor tax credit scheme will be expanded to investors in foreign investment portfolio investment entities with application from the 2013-14 income year. 
This is an excellent bill. The Government has listened to submissions through the select committee process. The bill has been improved and I have no difficulty whatever in commending its passing to the House. Thank you.