Clark David: Taxation (International Investment and Remedial Matters) Bill — In Committee 
Clark David: Taxation (International Investment and Remedial Matters) Bill — In Committee 
[Volume:677;Page:449] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 I stand to speak to the Taxation (International Investment and Remedial Matters) Bill. I stand here in part due to the infinite wisdom of the shadow Leader of the House who deemed that I should have an opportunity to speak so soon after my maiden speech on a topic of interest. 
Simon Bridges 
: Are you not interested in the bill? 
Dr DAVID CLARK 
: I note also that in his infinite wisdom as the member opposite raises the question the bill he chose to provide me with this opportunity is indeed the Taxation (International Investment and Remedial Matters) Bill. It is surely not the most important or urgent bill before the House currently and it is a bill that has made slow progress. It has been around for nearly a year and I think I should probably reserve my judgment on whether it is a compliment or a commentary that I have this opportunity so soon to speak to such a bill. That we are dealing with this matter does reek of a Government bereft of a plan other than to sell assets.  
Labour will support this bill but it does have concerns about the removal of the approved issuer levy. That levy is on payments of interest on securities meeting certain requirements as notified under the Act. The question as to why we would give away the small amount of money the small amount of revenue gained by the approved issuer levy rather than actually making a more robust mechanism has not convincingly been answered. It is better to give I guess a neutral tax signal like capital gains tax to make sure that investment is done on a basis of profitability than to be tinkering in this way and tinkering around with the idea of investment on the basis of tax treatment which is the inevitable result.  
I do agree with the Minister of Revenue that it is important that we do not encourage New Zealand ownership of offshore operations to be undermined by uncompetitive tax rates in New Zealand on overseas income. If we do that we create a perverse incentive for companies to move from New Zealand to overseas jurisdictions. Indeed we must guard against that danger. But there are many ways to skin a cat. A broader tax base would also allow for lower rates and a more competitive tax system and surely to look at those bigger mechanisms would be a worthier use of parliamentary time. There are many other revenue options and financial transaction taxes capital gains taxes and estate duties are amongst them.  
We do need to address the dropping tax base. There is an urgent need to address this. The recent briefing to the incoming Minister from the Inland Revenue Department showed a 4 percent drop in revenue and that is quite shocking. We need to preserve the services that New Zealanders value. A 4 percent drop in revenue is of great concern. The officials from the Inland Revenue Department pointed out that only 1.5 percent of that can be attributed in any way to a recession and 2.5 percent of that drop in Government revenue has come as a direct result of Government policy changes. That is that switch to regressive GST which has punished those who work hard but do not have the capital that you need to really advantage yourself in the system.  
Those tax cuts that made this possible gave the top 10 percent of income earners 41 percent of the value of the cuts. Those at the bottom 20 percent got just 2 percent of the value of those tax cuts. They are a lot worse off as a result of that tax switch and overall our tax take is down. That is something we should be worrying ourselves with rather than the matter of the approved issuer levy.  
In summary Labour has supported this bill but we retain our concerns with regard to the removal of the approved issuer levy. Thank you.