Tisch Lindsay: Taxation (KiwiSaver and Company Tax RateAmendments) Bill — Second Reading In Committee Third Reading 
Tisch Lindsay: Taxation (KiwiSaver and Company Tax RateAmendments) Bill — Second Reading In Committee Third Reading 
[Volume:639;Page:9468] 
LINDSAY TISCH (National—Piako) 
: 
 The Taxation (KiwiSaver and Company Tax Rate Amendments) Bill will make businesses $1 billion worse off than they are today. You see what is happening here is that although the corporate tax rate will be cut from 33 percent to 30 percent the cost of implementation for an employer will be higher than that 3c in the dollar cut. Where is the fairness and where is the equity in that? This measure is a tax increase. It is a compliance cost increase for small business. We all know that 95 percent of the businesses in New Zealand are small to medium sized enterprises. There are 300000 businesses that fall into that category. Sixty percent of those businesses will not benefit from the corporate tax rate reduction. Sixty percent of 300000 is 180000. One hundred and eighty thousand small to medium sized businesses—that is businesses employing fewer than 20 people—will get no actual benefit whatsoever. Why? Because they are either sole traders or partnerships they will miss out. 
However those businesses will still have to contribute to an employee’s KiwiSaver account. If an employee decides he or she wants to opt into the KiwiSaver scheme then deductions will have to be made. As we have seen the real hoax in yesterday’s Budget is that there will be a compulsory employer contribution. Who thought of that? The real hoax in this Budget is that businesses will carry the can. In fact it is— 
The CHAIRPERSON (Hon Clem Simich) 
: I am sorry Mr Tisch. This debate is on Part 2 which is entitled “Amendments to other Acts and Regulations”. Your debate was appropriate for Part 1 and it will also be appropriate for clauses 1 and 2 which are coming up shortly. 
LINDSAY TISCH 
: Well any sorts of amendments that come through in these parts have a reflection on the way we do business—whether it is as employees who are wondering what is in it for them or whether it is as a business owner. These points are very relevant because they add to the compliance costs associated with doing business. I think we have to make it very very clear that this measure is a hoax for small businesses—an absolute nonsense. 
When we look at any associated legislation that may be impacted on by this measure we see that it adds once again to compliance costs. What does KiwiSaver and all of the associated amendments that go with it actually mean to employers? What is the process they will have to go through? 
John Hayes 
: Cost. 
LINDSAY TISCH 
: Well it will end up being a cost. When I have gone around talking to business owners I have found that only about 5 percent of them actually know how the KiwiSaver scheme works. Yet that measure will be implemented from 1 July. The horrendous costs we will see with regard to it will be quite significant for small to medium sized enterprises which do not have the resources to employ somebody specifically to spend his or her time on the new payroll tax and to work through the process of whether someone will opt into or out of the scheme. The cost is associated with any provisions in other legislation that impact on what the whole scheme is about. 
In dealing with this issue—the process that one must go through in looking at whether an employee will opt into the scheme—the employer needs to be able to tell the person what is in it for him or her—what the employee will receive in terms of benefit. I will not discuss those things as I know they are not part of this debate. But I think we need to bring it back to the process that will be followed—with all the implications that go with it—and that the employer will have to go through. If the employer is a company then it will receive a tax reduction from 33c in the dollar to 30c in the dollar but if the employer is a sole trader or a partnership then he or she will get no benefit whatsoever. The compulsory contribution to an employee’s KiwiSaver account is where the compliance costs come in and that is what National is opposed to. This scheme is a hindrance and a hoax on employers in New Zealand. 
Let us look at the process that we will go through from 1 July. Here it is. I have a graph here; it is a matrix of what will be involved.