Dunne Peter: Taxation (Tax Administration and Remedial Matters) Bill — In Committee Third Reading 
Dunne Peter: Taxation (Tax Administration and Remedial Matters) Bill — In Committee Third Reading 
[Volume:675;Page:20762] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 There are a number of things I should say by way of response. The first is to take up the member’s point about the timing of this legislation. My recollection is that the announcement that gift duty was to be abolished was made in June of last year June 2010. We said at the time that the legislation would be introduced via the next available legislative vehicle which happened to be this Taxation (Tax Administration and Remedial Matters) Bill. There is nothing unusual in policy changes being introduced in legislation of this type because these are in effect umbrella bills. The bill then went to the Finance and Expenditure Committee and submissions were called for on the provisions. The committee went through the bill and came back with a recommendation which we are now implementing many months later. 
Prior to the decision even being made a substantial review had been undertaken across the Government about whether we should simply just increase the threshold or abolish gift duty altogether. It became clear during that review that agencies like the Ministry of Economic Development Treasury the Ministry of Justice the Ministry of Health the New Zealand Police the Ministry of Social Development and the Housing New Zealand Corporation all said that with regard to potential abuses of the system which the member has referred to existing powers in existing legislation were more than adequate to deal with those concerns and that gift duty our second-oldest tax after stamp duty was therefore an anachronism and ought to be gone. 
But the story gets more compelling. Each year several hundred thousand gift duty returns are made to the Inland Revenue Department. Over 98 percent of those are nil returns. We spend about $500000— 
Hon Trevor Mallard 
: Nil tax or nil gifts? 
Hon PETER DUNNE 
: Nil in terms of the— 
Amy Adams 
: Nil tax paid. 
Hon Trevor Mallard 
: Nil tax not nil gifts? 
Hon PETER DUNNE 
: That is right. We spend about $500000 a year administering the gift duty system; we raise about a million dollars a year. So we have a tax that raises $500000 net a year but 98-plus percent of those who are affected by it are not actually caught by it. But here is the rub: any reasonable assessment shows that it is costing taxpayers not $500000 but $70 million a year to comply with the duty. That becomes somewhat of a no-brainer when the advice then becomes very strong that existing legislation in other areas is dealing with the mischief we are seeking to address in the first place. So the logic for retaining gift duty simply goes out the window at that point. The only people who are a little concerned about its departure I dare say are lawyers and accountants who for years have done very very well in terms of filing returns and preparing information to go to the Inland Revenue Department. It has been an easy source of income for them. Well not any longer. 
When estate duty was abolished in 1992 the Government of the day considered abolishing gift duty but decided not to at that point because it was a revenue earner. The reality is that it is not any more. We have significant provisions in other social legislation that take account of the capacity of people to manipulate the system so gift duty’s day has long since been and gone. What this legislation does—and I am very proud of the fact—is bury it from 1 October this year. There will be adequate provisions in other legislation and they will be enforced. That is what was intended to be the case all along. 
The strong argument that one could mount for the retention of gift duty was not all that strong. It was simply that if we take the duty away then other legislation will have to be enforced. That is really what it comes down to. Gift duty has been a convenient way out: we have not needed to worry about enforcing other legislation because we have had gift duty. That is back to front. Gift duty is costing taxpayers a lot of money it is raising very little for the Crown it is irrelevant it is time for it to go and that is what this legislation will do. 
In the time remaining to me I will pick up a point that Mr Lees-Galloway made in relation to an earlier part concerning use-of-money interest. He will find that the answers to his questions are actually contained in the provisions of this part regarding the way in which use-of-money interest applies and also the obligations for both the Crown and the taxpayer in that respect.