Smith DamienDAMIEN SMITH (ACT): That is highly amusing coming from the least transparent Government in recent history. I have a problem because this bill has left me speechless at these so-called tax principles—that it's absolutely appalling. This is legislation for the taxation of all economic income. So with nine minutes and 30 seconds left it's hard to remain speechless but that's how I feel.This Taxation Principles Reporting Bill was dreamt up in the hot steamy bathroom of the Minister of Revenue with a mulled whisky and he said Oh let's just write my opus now. Let's redefine the tax principles." And they are off to really what I would call an unprincipled start. So let's call this bill the "Tax Unprincipled Act" which if you want to look for a progressive solution all you have to do is reach to the ACT alternative budget which is available to the public for their decision making.It's no secret that Inland Revenue has been working on the development of the Taxation Principles Reporting Bill. The item has been on the tax policy work programme and has been referenced by the Minister during his 2020 and 2022 speech on tax fairness. And we don't believe that tax unfairness should be defined by one man. We'd rather have a flat rate tax system which was understood by every single person in the country and by everybody who has to modify these tax changes in law.In 2022 the Minister advised an important stage of the project will be wide public consultation on the proposed principles and reporting framework and we'd be going around that in the middle of the year we'd share your views. I would like to see these principles enacted in a bill before the end of the current parliamentary term. Well mid-2022 came and went and there was no consultation. So it was with some surprise—but not really given recent history—that the Government made the decision to once again bypass seeking public feedback on a proposed tax law and it's instead gone straight into legislation in the form of the "Tax Principles (Unprincipled) Reporting Bill". This bill will be tabled as we speak today and is expected to swiftly proceed through its parliamentary processes in a time frame that will leave the Finance and Expenditure Committee breathless no doubt. At one stage I thought this was not even going to go to a select committee process.Those who are the keen followers of the tax system would probably say their number one tax principle would be that we follow the generic tax policy process the GTPP. The GTPP has been in place since 1994 and is designed to ensure that tax laws are well thought through and stakeholders have the opportunity to contribute to the design of laws. The decision to bypass consultation on the bill goes counter to the GTPP and rewrites history and is another example from this Government of reducing trust disclosure rules and extensive information-gathering powers after the 2020 election. The irony of the lack of GTPP on tax principles will not be lost on the tax community.So what are the tax principles that should be followed? Well just having seen the legislation we can only speculate that they're based on what the Minister's preview listed as his principles: horizontal equity vertical equity administrative efficiency and the minimisation of tax-induced distortions. You would expect in many cases tax proposals will not satisfy all of these principles. For example the denial of interest rate deductibility on residential property would probably fail all principles.The next outcome could be tax policy developments that get tied up in knots and given the possibility that this legislation will be based around investments in the economy—aside from having principles to comply with the bill is expected to include information collection and monitoring requirements. How is the new tax law expected to satisfy the principles; has it actually achieved its purpose etc.? And now it's being pushed through under urgency. It sets the scene for an election period where all the political parties' policies will be debated against these principles. And given the lack of consultation on what the tax principles are it hardly seems a principle and perhaps gives a glimpse of what may be coming from the Labour Party tax policy: a simple tax change which increases horizontal and vertical equity. As with most things tax related the devil will be in the detail and we'll be preparing a further summary once that has been proposed.But as I can see—going on to the bill—you can look at the bill itself and ask yourself: did the Minister bottle it at the end? If you look at clauses 6 7 and 8 and what's related to the commissioner he's backed out at the end. So this isn't a full-on commitment or full-scale commitment to principles. If you look at the treatment of Māori rights you could actually get a smart young Māori lawyer to drive a truck through the tax system based just on that statement alone and hold the tax system to ransom. And everybody whether it's a Māori trust or an independent trust should have the same principles and rights and understandings.The disclosure statements were less than adequate. We've talked about consultation. The regulatory impact statement—based on limited feedback the Government said there's a high level of support for core tax principles for improving transparency. Really? Well that has to be discussed.The Minister is guilty of using incorrect information and misunderstanding of information which can lead to mistrust and cherry-picking data from the high-wealth report and that's not correct.The article of the principles in Schedule 1 of this bill is criticised by officials and is worth mentioning. The explanation of tax principles include stated assertions commonly associated with the expression of these principles and Inland Revenue's views. The inclusion of these statements could present a risk to the integrity independence and assurance of the reporting framework. An explanation of horizontal equity would usually not include reference to the time value of money and similarly an explanation of vertical equity would typically refer to people in different positions rather than wealthy people. An explanation of this principle of flexibility and adaptability would usually not include explicit references to changes in equality. The inclusion of contested statements—that GST is regressive—concerns the distributional impact of a tax on consumption and remains an area of ongoing inquiry.For presuming decisions about trade-offs this is not the justification for a substantial unfairness and within the explanation of the principles a ranking of principles amongst themselves leaves a lot to be desired. The bill commentary itself and report timing on the full report is aggressive and the annual report should only include information that's been based on the most recent tax year.So we overall are not really clear that this is actually required as the Minister himself is already manipulating data and setting an agenda that is against the spirit of tax manufacturing in this country and is suited for political arguments which is unacceptable and we should scrutinise it when this bill comes to the committee. Thank you Madam Speaker."