Key John: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — In Committee 
Key John: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — In Committee 
[Volume:621;Page:16508] 
JOHN KEY (National—Helensville) 
: 
 National will be opposing the Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill. I want to address Part 2 and clauses 26 to 28 that interestingly enough concern Maori authorities. 
Hon David Carter 
: John Tamihere. 
JOHN KEY 
: It is about how they have a special tax rate of 19.5 percent. I would be very worried about that if I were John Tamihere. But I am not so worried because we heard from the Prime Minister today that John Tamihere will be ringing in to contribute to the debate. He will probably do that on his Telstra free line but he will be ringing in—0800 HELP. Let us face it 19.5 percent would be better than what they actually got which was zero so maybe it is a positive. 
A 19.5 percentage rate for Maori authorities is a very interesting position— 
Hon Damien O'Connor 
: It’s now your poll rating. 
JOHN KEY 
: No our poll rate is not 19.5 percent; Mr O’Connor does not need to worry about that—but the interesting point about that rate is that the Government pushed it through on the basis that most beneficiaries of Maori authorities would have had it as their final after-tax rate. So in principle the idea was that it would save them having to re-file and to top up taxation again. The interesting issue about that of course is not about the final beneficiaries. That may in fact be correct when it is distributed to final beneficiaries of Maori authorities but in the interim they have cash available to them for which other companies would have to pay a company taxation rate of 33 percent. One might sit there and say: “Oh well maybe that’s not really that big a deal.” 
Hon Richard Prebble 
: But they have higher koha payments. 
JOHN KEY 
: They do have higher koha payments. Interestingly enough one might have a look at the position recently with Aotearoa Fisheries Ltd. That company is now in the position where it will be paying 19.5 percent taxation—and competing with the private sector that is out there paying 33 percent—under clause 27 “Distributions by Maori authority” and clause 28 “Amount distributed to member by Maori authority”. That makes a nonsense of the fact that this Government does not want to lower the company tax rate for all sorts of reasons. Michael Cullen has gone up and down the country telling us that it does not matter that companies pay a higher rate of taxation in New Zealand than they pay in many other parts of the OECD. 
I want to draw Mr Cunliffe’s attention to this point. He was quoting some statistics from the OECD but this is the important statistic he should consider: In 1999 when the then National Government left office the company rate of taxation in New Zealand was 33 percent and the average in the OECD was 35 percent. We had a competitive advantage—2 percent compared to the advantage—and I will allow Mr Cunliffe to work that out. 
Today as I look around I see that the average corporate tax rate in the OECD is 29.6 percent. New Zealand’s rate interestingly enough sits at 33 percent and the rate for Maori authorities sits at 19.5 percent. New Zealand has gone from a position of competitive advantage under a Labour Government to a position of competitive disadvantage. So if Mr Cunliffe wants to have a look at the OECD and at how this Government is structuring New Zealanders and giving them the opportunity to participate to be successful and to compete then I strongly suggest that he takes a moment to have a look at what has been happening there and to have a look at the situation in relation to New Zealand’s relative position in the OECD. 
I want also to talk for a moment if I may about issues in relation to PAYE and intermediaries. Under clause 54 some interesting moves have been made in terms of providing a situation where tax advisers will be in a confidential position. We would welcome that although it is not a change in this particular bill. But interestingly enough at the same time as the Government is introducing that it has tried to bring out an amnesty for the black economy here in New Zealand. When we had the Inland Revenue Department before the Finance and Expenditure Committee to talk about this very issue we asked it how large it thought the black economy was in New Zealand and what amnesty might be available if the Government could get it right. The answer was that the department estimated that no tax is paid on around 10 percent of the economy. 
Hon Richard Prebble 
: Have they heard of the Waipareira Trust? 
JOHN KEY 
: We know where the 10 percent is sitting funnily enough. We could point the department in that direction. The department does not need an amnesty for that one; it will be able to be pointed in the right direction. However roughly $15 billion-worth of revenue is actually not getting tax treatment.