Parker David: Taxation (Depreciation Payment Dates Alignment FBT and Miscellaneous Provisions) Bill — First Reading 
Parker David: Taxation (Depreciation Payment Dates Alignment FBT and Miscellaneous Provisions) Bill — First Reading 
[Volume:626;Page:21229] 
DAVID PARKER (Labour—Otago) 
: 
 That speech was a sad effort really. The reality is that this bill improves depreciation deductibility changes provisions relating to when one has to pay one’s income tax and reduces fringe benefit tax as well as doing a number of other things. It reduces the taxes of businesses by $1.5 billion. 
We have heard members on the other side of the House assert that members on this side do not understand business. 
Pansy Wong 
: It’s true. 
DAVID PARKER 
: I tell that member that I probably have more business experience than most members of her own party. I have big-business experience and I have small-business experience. My parents were small-business people. My grandparents on both sides were small-business people. I and many other members of the Labour Party have business experience I understand our tax system and I know that this tax bill is a good bill. 
Most people in business understand that New Zealand’s business tax regime gives dividend imputation credits for every dollar of company tax that is paid. People credit that against their personal income tax. Overseas-based companies actually benefit from tax cuts in a way that does not benefit New Zealand taxpayers because the extra tax cut given to an overseas company flows from New Zealand to that overseas jurisdiction. It does not stay in New Zealand whereas the benefit of tax cuts at the company tax level to New Zealanders who own companies is merely one of timing and it does not usually alter their overall tax bill when they come to pay their personal tax. 
I turn now to some of the individual provisions in the bill. We have followed the recommendation of the business compliance cost advisory panel. It identified that one issue affecting small businesses is that it is quite onerous for them to complete PAYE returns. We are helping them by taking that cost from small business and turning it into a Government cost which is what it ought to be—after all those businesses are collecting and paying PAYE for their employees on behalf of the taxpayer and they should not have to bear the cost of doing so. We are taking that big cost from small businesses. 
We are also improving depreciation rules. At present if an asset is worth less than $200 people do not have to depreciate it; they just write it off in the year that they buy it rather than having to put it through the compliance costs associated with depreciating it over time. We are changing that threshold from $200 to $500 so that assets up to $500 can be written off in the year they are purchased rather than have their value depreciate over time. That again is quite a costly measure and this move is beneficial to business. 
What else is the Government doing? Businesses sometimes have difficulty matching their income tax payments with their cash flow. One of the issues that has been raised with us is that if business people have to make their provisional tax payments three times a year the payments do not actually coincide with the cash flow from the business. We are changing that. We are making that better by allowing people a choice. We are not forcing it on them; we are just giving them the choice. If they want to make their tax payments coincide with their GST returns and their GST return payments they can now do so so that their tax payments will reflect their cash flow and therefore their ability to pay their taxes rather than be an artificial “one third one third one third” provisional tax payment. 
What else are we doing? Fringe benefit tax rates are being changed. For years the National Government did not move on fringe benefit tax rates. We have the absurd situation where if people own a car that they purchased years ago for a high amount they pay fringe benefit tax on that high amount years later after the car has depreciated in value. At present people have to pay fringe benefit tax on the purchase price of the car rather than on the value of the car at the later date. We are changing that. It is another very sensible but quite expensive thing to do. We are saying that if a car bought 10 years ago cost $30000 but its value is now $10000 we will not charge fringe benefit tax on the $30000 purchase price; we will charge fringe benefit tax on the decreased value of $10000. So in that example fringe benefit tax would go down by two-thirds. That is not an unusual circumstance. 
This is very good legislation. It decreases the tax burden of businesses by $1.5 billion the benefits of which will be received in New Zealand and not exported overseas. 
What are National members doing? They are voting against the bill because of course they have their very expensive tax bribe to offer later in the year predicated on the assumption that this Government spends money unwisely. The reality however is that our core Government spending at present is around 30 percent of GDP which is less than the 33 percent of GDP spent by the National Government on its core Government spending when it was in office. I am very happy to support the first reading of this bill.