Shanks Katrina: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
Shanks Katrina: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
[Volume:644;Page:13740] 
KATRINA SHANKS (National) 
: 
 It is my pleasure to speak on the title of this bill. In the debate on this bill I have spoken about KiwiSaver and research and development tax credits but I have not yet spoken about corporate tax rates and I want to address them for a little bit. However the one theme that is coming through as we read this bill digest it and understand it is the theme of how complex it is. Where is the long-term strategy for tax in New Zealand? There does not seem to be a long-term strategy. It all seems to be very piecemeal and I have a problem with that. 
I talked about research and development tax credits. We can talk about how there are now vehicles to try to get research and development tax credits. The perfect example was that the policy for research tax credits came from Australia. In Australia banks tried to take advantage of these research and development tax credits by saying that development of their software was research and development when actually it was redevelopment of software they already had. And that is what we will see. We will see people coming in and trying to take advantage of situations. Obviously there are loopholes in this legislation that enable people to do that and I do not think they have been addressed as they should be. 
When we talk about research and development it is just one tiny portion of this legislation. There are gaps in the legislation where people will try to take advantage of tax credits. Once again we have created a little tax pocket for a limited number of businesses. When we talk about KiwiSaver tax credits we are talking about exactly the same thing. We are taking about applying a specific tax advantage to a small portion of our population—to those going into KiwiSaver. I get confused as to where the strategy is. Should we not have one tax structure—structure not rate—for everybody that is the same so that everybody progresses through the tax structure instead of “You belong in this silo you belong in this silo and you belong in this silo.” and making it very piecemeal? 
I believe that the Minister Peter Dunne who has put this big bit of legislation together—and it is a big bit of legislation—supported Working for Families when it went through this House and it is another form of tax credit. The Labour Government would say that it is a tax cut but in effect it is a tax credit. For years this Minister has campaigned on income splitting but nowhere in this bill have I seen income splitting come through. He has campaigned and campaigned on income splitting for the last 24 years. One would think that the Minister of Revenue would be able to get it into this tax bill but it has not made it. So how does what he has here line up with his long-term strategy for where he wants to see tax in New Zealand? It is quite interesting because obviously he is passionate about that matter but this legislation does not support what he believes. It will be interesting to see what the long-term strategy is for this legislation. 
I would like to touch on the corporate tax rates in this legislation because I believe that they add another level of complexity. We now have a corporate tax rate at 30 percent a personal tax rate at 33 percent a personal tax rate at 39 percent and then there are not-for-profits which are still sitting on 33 percent. We have a range of tax rates now that people can use depending on the legal entity vehicle they are using. So we have silos again. People will really have to think about how they will structure their organisation to get the best tax benefits they can. This creates another vehicle for people to get into the 30 percent rate. We do not want to encourage avoidance which I think this legislation does by widening the gaps between all the different tax rates. We have to be careful when we generate new legislation that we do not allow this to happen but I believe that is what we are doing in many areas in this legislation. We are creating silos where people can apply do a bit of manipulation and move their businesses around. Accountants and lawyers must be extremely happy with this.