Hayes John: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
Text is incorporated into the Bound Volume 
Hayes John: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
[Sitting date: 28 August 2012. Volume:683;Page:4846. Text is incorporated into the Bound Volume.] 
JOHN HAYES (National—Wairarapa) 
: 
 I would like to bring us back to “Planet New Zealand” away from “Planet Labour”. Before I speak about Part 2 of the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill and the changes in Part 2 that we are debating at this point I think we have to look at the global reasons as to why we are making these changes and why we are introducing this bill. We are doing it because we want to make a more competitive and productive economy. With reference to the previous speaker Raymond Huo I have got to say to you that I did not ever feel that Mr Muldoon was about making a more productive economy or certainly a competitive one. It is only by lifting our economic performance that we can create jobs boost incomes improve living standards and provide world-class services for the people in my electorate the Wairarapa electorate. That is what we want to deliver to them. 
I would like to reinforce comments made by the Minister of Revenue. Before we made changes to KiwiSaver the scheme was costing the Government $1.2 billion a year and rising in subsidies and tax breaks. We had to borrow that money from overseas. As the Minister said that was not sustainable. So what we have done is we have kept the $1000 kick-start payment from the Government. That has not been changed in this bill. It is not changed in Part 2. We have reduced the Government’s borrowing and increased private sector contributions to KiwiSaver. Why are we doing that? To increase national savings. So for the year ended 30 June 2012 and beyond the tax credit was halved to 50c for every dollar contributed by members up to a maximum of $521 a year. That is what this bill provides for. 
From 1 April 2012 employer contributions are being taxed at a rate broadly equivalent to an employee’s marginal rate and then from 1 April 2013 this bill provides for the minimum employee contribution to increase to 3 percent. The compulsory employer contributions will increase to 3 percent as well. That is not a flip-flop. It is about saying that we managed to get the scheme under control. It is now sustainable. We have to give Kiwis confidence that future Governments can afford to maintain KiwiSaver. They will be future National Governments of course. The Government is going to spend as a result of these changes $2.6 billion less over 4 years on member tax credits. We will encourage private savings and the employer and Government contributions including the $1000 kick-start will continue as an attractive savings option. 
The changes in Part 2 are creating a simpler and fairer tax system that rewards hard work. That will be a foreign concept to many of the people across the Chamber despite the protestations of the ex - Families Commissioner who delivered nothing in his period of tenure— 
Hon Judith Collins 
: Absolutely nothing. Spent $9 million a year for nothing. 
JOHN HAYES 
: —and spent $9 million a year for no delivery no outcome whatsoever. What we will be doing through these changes is protecting the vulnerable—the very people he professes to be concerned about. 
We have delivered across-the-board tax cuts and we are delivering more money to working New Zealanders. Two-thirds of the cuts to income tax went into reducing the bottom two tax rates. So now we are in a situation where the changes in Part 2 of this bill will mean that three-quarters of earners are paying no more than 17.5 percent in personal income tax. We have cut the company tax in this bill to 28 percent ensuring our businesses remain competitive. When you are concerned about families—or you profess to be—you will find that a family with two children can earn up to $50000 for that family and pay no tax at all when you take Working for Families into account. [ 
Interruption 
] I would just like to repeat that because I was being rudely interrupted. I want to stress in response to the concerns—or the professed concerns—across the Chamber that a family with two children can earn $50000 a year and pay no tax at all. Zero tax. How much is nothing zip zero? That is the tax a family with two children will pay. So what is going on in this community and our families and certainly my constituents in the Wairarapa know this is that after-tax wages are increasing faster than prices under this Government. 
I have heard various speakers on the other side of the Chamber slandering Richwhite and Fay and I want to point out to them that they have not read the changes that we are proposing in this bill. What the bill does is take steps to tighten the private property tax rules by eliminating depreciation removing the loss attributing qualifying companies rules and improving Working for Families and integrity measures. The Inland Revenue Department’s funding for audit and compliance—and I congratulate the Minister of Revenue for his work in this area—has been increased and we expect that to generate substantial revenue in the 4 years to 2014-15. But of course under the people from the Opposition who are criticising this legislation their alternative would be to bring in a capital gains tax. They want to more than double the employer contribution to KiwiSaver costs and they want a big gap between the company rate and the top personal rate which encourages tax avoidance. We do not on this side of the Chamber stand for those changes. 
In Part 2 we will see that the application date for changes to profit distribution plans under which bonus shares issued by a company will be treated as a taxable dividend will be deferred from 1 July 2012 to 1 October 2012. If you were to read the bill and the parts of the bill that we are making changes to you would see that it is very straightforward. Other changes to GST provisions have also been made such as clarifying the definition of “land” and where new apportionment rules for zero-rating supplies can be used. The foreign investor tax credit scheme will be extended to investors in foreign investment portfolio investment entities with application from 2013 and 2014. And as several speakers have noted tonight Part 2 provides for the deductibility of unsuccessful software development costs. That will apply from the 2006-07 income year rather than from 2007-08. As the Minister said these are very taxpayer-friendly changes. 
The KiwiSaver membership start date will be clarified for persons who joined through their employer. The start date determines when a person is able to withdraw their savings after 5 years of membership if aged 65 years or older. I would think that that would apply to the former Families Commissioner. Further amendments allowing certain shareholder employees of close companies to receive the in-work tax credit will also apply from 2011 rather than 1 April 2012 to enable eligible individuals to claim a tax credit for the 2011-12 income year. Finally I should say that in Part 2 the bill is going to clarify the tax position of insurance companies where there is a transfer of business during the income year. 
I congratulate the Minister on bringing to the House this bill and a series of very coherent changes to the bill and a series of coherent tax policies that will ensure that all New Zealanders will be better off and that people will be better in work will get more money in their bank accounts and will be able to save more through the policies that are being introduced by the Minister. I commend this bill.