Nash Stuart: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee 
Nash Stuart: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee 
[Volume:656;Page:6012] 
STUART NASH (Labour) 
: 
 I must admit I am very thankful for Peter Dunne’s speech earlier about payroll giving. I have always had difficulty in reconciling that someone could jump from Labour to National or change political philosophies over the space of a fortnight. For me the principles of social democracy run through my veins and I could never ever compromise such principles. I am pleased that Mr Dunne had unfinished work from when he was Minister of Revenue for Labour and became Minister of Revenue for National for the sole reason of getting this important legislation through. That is fantastic. As I mentioned the principles of social democracy run through my veins and I could never compromise such principles and that is why I certainly back the payroll giving scheme as outlined by Minister Dunne and spoken about by my colleague David Cunliffe and my Opposition colleagues. 
I will elaborate on the tax pooling which David Cunliffe talked about. It relates to section 15O to section 15T in clause 435 and is quite an important part of the Taxation (International Taxation Life Insurance and Remedial Matters) Bill. Provisional taxpayers do not always know how much their tax liability will be for the year and therefore how much provisional tax they need to pay. If they get the calculation wrong then they are subject to two-way use-of-money interest on the underpayment or overpayment of their tax liability. Provisional tax pooling was introduced in April 2003. It was great legislation and was implemented by the previous Labour Government—of course. It allows compliant taxpayers to reduce their exposure to use-of-money interest on underpayments as a result of uncertainty about their provisional tax payments by purchasing funds from or depositing funds with a tax pooling intermediary. This is a very important facet in today’s economy because there is a lot of uncertainty around the recession into which the National Government’s policies are driving us. 
Tax pooling generally involves a taxpayer depositing money with a tax pooling intermediary. The deposit earns interest which is good. The intermediary deposits that money in its pooling account with the Inland Revenue Department. The taxpayer may use his or her funds—the deposit—in the future to pay outstanding tax liabilities or sell the funds to the tax pooling intermediary. If the taxpayer sells the funds to the intermediary the intermediary can then sell the funds to another taxpayer for a fee. It may sound quite complicated but in fact it is quite a simple process and quite an important process. It optimises the tax system. It is a very good process—of course it is; it was put into law in 2003 by the Labour Government. 
Hon David Cunliffe 
: It was an excellent year for tax policy. 
STUART NASH 
: It was a very good year. Was that the year we dropped the corporate tax rate? 
Hon David Cunliffe 
: One of the years. 
STUART NASH 
: As I have mentioned several times Labour was the only Government in a generation to drop the corporate tax rate. We are the party of business and we are the party for farmers. But anyway let us talk about tax pooling. Many small to medium sized enterprises would say that tax pooling has made paying their provisional tax a lot easier. Labour is the party of the small to medium sized enterprise and Phil Goff will be the next Prime Minister of this country—bring it on! 
On the payment of a fee the intermediary transfers the funds to the other taxpayer’s income tax account as at the date the money was deposited with the intermediary. Usually that will coincide with the provisional tax due date. 
This is such a good bill because it was introduced by the Labour Government. Minister Dunne was a Minister in that Government. It is great that we have such a sense of conviviality around this bill. We all support it and we all love it because it was Labour tax legislation. 
Hon David Cunliffe 
: We trained him and gave him to the National Party. 
STUART NASH 
: We did indeed. Tax pooling enables provisional taxpayers to access money at lower interest rates than if they failed to pay provisional tax on the due date and were subject to use-of-money interest. It also enables taxpayers who have overpaid their tax to get a higher return from selling their funds than they would receive from the Inland Revenue Department. Of course we are not suggesting that the Inland Revenue Department would charge a hell of a lot more than a bank would on an overdraft facility or that it would charge a lot less on a deposit than a bank would but this legislation smoothes things out. I say to Mr Cunliffe that it is interesting because I often hear that in 9 long years Labour did nothing but we do not hear that from the Finance and Expenditure Committee.