Cosgrove Clayton: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Third ReadingText is incorporated into the Bound VolumeCosgrove Clayton: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Third Reading[Sitting date: 10 May 2016. Volume:713;Page:10894. Text is incorporated into the Bound Volume.]Hon CLAYTON COSGROVE (Labour): As other members have said the Labour Party will be supporting this piece of legislation. There is a maxim when it comes to taxation legislation: it should be transparent it should be simple for people to understand and it should have integrity.If you go through the legislation although there are to be fair the beginnings of some good work which we support it is noteworthy to look at some of its aspects. For instance we looked at National dragging its feet in respect of applying GST to products bought from overseas and we saw that after a lot of political hot air the previous Minister of Revenue—I think it was either Mr McClay or Mr Dunne I cannot recall which—said with a big hiss and a roar that he would go after online services in respect of GST. What did we come out with? Well we came out with iTunes and Netflix. It is not a bad start I have to say but I would ask the Minister for Small Business who I see is here how many New Zealand businesses will be affected in a positive way because GST is charged on those particular online services. I doubt whether there will be many in the small business space. I recall I think the Retailers Association which was pretty vehement and robust in its view that if you are going to do this you ought to do it correctly. There are a heck of a lot of other online services of course that will not attract GST under this bill anyway.What the Government has done is pick a bit of low-hanging fruit and trumpeted this as though it is some great taxation reform. To be fair it is a good start not a bad start. But if you are actually trying to get traction and assist small businesses in this country I would have thought that a lot more thought and policy work would have gone into this going well beyond iTunes and Netflix.I do not see too many small businesses down Lambton Quay—and I see a few members down the back of the National Party nodding—in the competitive space of iTunes and Netflix jumping up and down and rejoicing today as we have the third reading of this bill because it is going to assist them with millions of dollars flowing into their bank accounts. I do not think so. I doubt whether there are many small businesses down Lambton Quay or Queen Street or in Porirua or anywhere else that will be rejoicing because somehow their revenue base is secured because the Government decided to have a crack at Netflix and iTunes in respect of GST.There are other areas of online services and online purchases where the Government could have a major impact in levelling the playing field for domestic small businesses. Small businesses in New Zealand do not want a subsidy; they do not want something out of the box or some preferential treatment. What they are seeking here is a level playing field and a fair go and it will be interesting to see how long it takes the Government in its next tranche of tax legislation to advance those particular issues.I note that the last speaker Jami-Lee Ross was wont to go through the raft of changes the Inland Revenue Department (IRD) has made in respect of land purchases. He talked about the requirement for an IRD number—not exactly earth-shattering stuff—and the requirement for a brightline test of 2 years where tax is accrued if you sell a second property other than your family home within 2 years. A number of us made the point in the Finance and Expenditure Committee and we make the point again here today that if you are getting 20 to 24 points per annum of capital gain on a property in Auckland most property owners will not flip that property inside 2 years because they are making such huge capital gains. In fact one could argue that the best investment in New Zealand in respect of capital gains returns is a property owned in Auckland.What that 2-year provision and the third provision around residential withholding tax may do is have some minor impact on the fringes of property speculation. But in terms of those people who are buying properties for investment who are making—and there are a few business people across the aisle like the Minister for Small Business; could he tell me perhaps of a better investment with a better return than 20 to 24 points per annum? I do not know if there is such a thing. I see he is busy there in a culinary sense and may not be able to answer but I cannot see an investment greater than that in this country. That 2-year hold—when Treasury of course recommended 5-plus years—is again a bit of window dressing by this Government in respect of trying to be seen to be doing something about what it now is coming to terms with and acknowledging behind closed doors as a housing crisis.The last speaker talked about the Land Information office releasing figures and about foreign-ownership figures of 3 percent—nationwide I assume—and 4 percent in Auckland. What he forgot to say of course is that that is from the time that Land Information started collecting those figures which is what 3 or 4 months ago? I am not sure of the exact time frame. In the last 3 or 4 months—even Nick Smith over there looks in his own gregarious way like he cannot argue with that one.If you actually go back had we had those figures as we demanded and requested for years in Opposition saying that there should be a land register and a data collection system and that it should happen immediately when the Government came in when everybody else admitted there was a housing crisis apart from Nick Smith in his own benign way in that fantasy world he lives in—in his world in his environment in his ecosystem those sorts of crises do not exist.Had we had that database—they do not call it a database; they do not even call it a register because that would be conceding that they lost the political battle on that—over the last 6 years we would have a robust set of figures. Feet put to the fire they conceded and got Land Information and the IRD starting to collect that information over the last 3 or 4 months and somehow for the first tranche of the information to come out Nick Smith gets up and trumpets it as did the previous speaker as some sort of deep authoritative series of information.Well if you know anything about statistics—and even Nick Smith might know something about—Brett Hudson: Feel the burn Clayton.Hon CLAYTON COSGROVE: It is Hudson and Halls down the back chirping away.If you know anything about statistics you look at a trend. You do not look at a one-off snapshot and you do not look at and see as authoritative and with integrity one snapshot from a new set of data the first time you take it.Brett Hudson: The facts are getting in the way aren’t they Clayton?Hon CLAYTON COSGROVE: I cannot quite hear through the verbal garbage going on down the back of the House but you do not take in an authoritative way—if you know anything about statistics—the first snapshot in a new series of data. No you look at a trend. Had we had that series of data 6 years ago when members of this political party and others in the housing sector called for it so that we could measure these things we would have a trend and we would have predicable information that we could do some analysis with. In the next 6 years now that we have got this so-called register I am sure that we will be able to build on this. But to come to the House today and say that the first snapshot that we have taken now gives us a sort of global reach in terms of projecting out what will happen in New Zealand in respect of overseas property purchases is a bit rich.I say that we will support this piece of legislation but I do hope that the new Minister of Revenue—I think the third that we have had in what 6 months or so—will have enough time in the chair to actually progress the online taxation issues progress in a meaningful way those GST issues around internet charging and go far further than the couple of bits of low-hanging half-rotting fruit in a taxation sense that have been plucked and pulled and heaved off the tree so that the Government members can stand up and say “Hey we’re on the side of small business. We are addressing and levelling the playing field for small business.” when we all know that there ain’t too many small and medium sized businesses competing with Netflix and iTunes. It is not a bad start. We hope to see far more integrated and authoritative tax legislation as we progress in this financial year.