Foss Craig: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — In Committee Third Reading 
Foss Craig: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — In Committee Third Reading 
[Volume:647;Page:16318] 
CRAIG FOSS (National—Tukituki) 
: 
 As I rise to speak on Part 3 I note that we are allowed to have a wide-ranging discussion and I will do a mix of both talking widely and talking about specific matters. First of all it is a bit of a tradition and a simple courtesy in the Committee stage to thank the officials for all the hard work they have done around the select committee inquiries and in giving us advice on a bill as a robust select committee process examines and investigates the bill. Sadly I cannot thank the officials for that in this instance because this bill is going through the House under urgency and has never been seen by a select committee. But I do heartily congratulate Treasury officials because obviously their ideological burping has finally been heard. Perhaps it is no longer ideological burping at least in the eyes of the Minister of Finance who through gritted teeth delivered this Budget yesterday. He has finally taken Treasury advice which when I first came into this Parliament was robustly included in its briefing to the incoming Minister. I think that that advice was in the Reserve Bank’s briefing as well. 
Also a select committee has not had the opportunity to ask for and get further advice on this bill. As we glance at the bill we know we have really had it for only about 3 or 4 hours in terms of parliamentary time. Normally we would ask the officials to tell us about say clause 59 or clause 60. I suggest that the Minister get up and explain the clauses in this part because they are all cross-referenced to the various income tax Acts on the Table there—great doorstops that they are. We are not able to cross-reference every clause here and the provisions here are massively wide ranging from fix-ups to the changes announced in the Budget. Who quite knows what might be lying between the lines here? 
One thing that was missing from the Minister’s comments on the bill even when he spoke on this part—and someone introduced this point earlier in the debate on Part 1—was passion. There was no passion. There was no vision. The Minister talked about what is written in the bill but it is actually what is between the lines that is important. As New Zealanders know this bill was introduced with incredible reluctance and if any one doubts that he or she needs only to read any speech make by the Minister of Finance and his associates over the past 8 or 9 years. I will come back to that. 
I refer now to clause 54 “Portfolio tax rate entity to give statement to investors and request information”. I will just touch on the basics and ask the Minister whether he would like to clarify that clause. I presume that it relates to portfolio investment entities etc. After the last Budget I had a chat to the Minister of Revenue. I know that his nirvana is “30 30 30”—a top corporate rate of 30c in the dollar a top personal rate of 30c in the dollar and a top trust rate of 30c in the dollar. Well actually this bill goes nowhere near to addressing the complexity of the legislation on taxation or the need to spend more than would otherwise be necessary on accountants and officials in order to find the most efficient tax position for individuals companies and trusts. So the “30 30 30” issue has not even been addressed here. As I said I recall that after the last Budget we had quite a discussion. Obviously the Minister of Revenue has got some wins in the bill. His speech yesterday about the intent of taxation was very good but he obviously has not won on this one. 
I would also like to touch on clause 58 “KiwiSaver Act 2006”. The KiwiSaver Bill was rushed through under urgency—I am sure there was urgency—and then various amendments and changes came through again under urgency. As corporates out there were struggling to adjust their payrolls in order to account for KiwiSaver—to take account of the contribution rates; 1 percent 2 percent 3 percent and 4 percent etc—issues and problems came about simply because the legislation had been rushed though under urgency and had not been thought through. Yes we did have officials here but the issues slipped past them at that time. There is a lot of complexity in the system; it has various rates some of which are half-yearly. I appreciate what the Minister said about smoothing it out come 1 April next year. Yes further trees have been lost for the sake of this bill but perhaps for the benefit of personal tax cuts that is a small price to pay. 
I turn to clause 44 “Resident passive income”. The clause talks about dividends but I cannot quite find it at the moment. 
Hon Trevor Mallard 
: Which clause? 
CRAIG FOSS 
: Well let us go to clause 39 “Methods for calculating provisional tax liability”. Again I wonder whether the Minister could expand on that a bit further. Perhaps it synchronises with GST provisional tax dates etc. Again we do not have the luxury of asking officials and advisers for further in-depth information about these various clauses. 
It is very important to note that yes the Ministers may be going around the traps and talking up that alignment there but what is being lost sight of in this debate is the fact that provisional tax payments for this year are down by some 10 or 15 percent from what I have seen. Sorry—the payments are up but the estimations of profit and loss at least up in Hawke’s Bay are down by about 10 or 15 percent. That is a shocker. Fair enough it is mentioned in the Budget that revenue is tracking down and the economy is tracking down. That does not quite align with the GDP growth going up to about 2.8 percent which I think the Budget says somewhere will occur. I guess my point is that this measure again does not really deal with the hard side of things; it deals with one side of the equation. The key part of the equation here is the ability of companies and New Zealanders to pay—their ability to manage and to fund their way through the commodity booms etc. 
I will make just a couple of other points. I refer to clause 29 “Adjustment when person is non-resident for part of tax year”. I ask the Minister or the officials to clarify that. Does that include for example the 70000-odd Kiwis who have left New Zealand this year? How does it apply to them? I presume that most of them will be in that position. Once the Kiwis who left to join the other 500000 Kiwis in Australia get their adjustment back for part of a tax year here plus the benefits of an income in Australia that is one-third higher than here their New Zealand tax return for this year subject to clause 29 will be very interesting. 
I can see that your finger is on the button Mr Chairperson but I have a final question. I would like the Minister to expand a wee bit on clause 31 “Meaning of charitable or other public benefit gift”. The brief talks about schools etc. but would it include things such as an interest-free loan? Is it tightly tied in with tertiary education institutions or in fact is there the ability for someone to arbitrage that and provide say an interest-free loan outside the tax net? I do not know whether that is the case. 
This speech may be going all over the show but that is simply because we have not had the democratic process involving Treasury officials at the select committee an independent adviser and the Eichelbaum process being followed so that we can address these issues and have robust taxation legislation in New Zealand. Thanks Mr Chair.