Goldsmith Paul: Supplementary Estimates Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — Second ReadingText is incorporated into the Bound VolumeGoldsmith Paul: Supplementary Estimates Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — Second Reading[Sitting date: 26 June 2013. Volume:691;Page:11343. Text is incorporated into the Bound Volume.]Supplementary EstimatesPAUL GOLDSMITH (National):It was very educational as always to listen to our colleague Mr Cunliffe who is always very full and detailed in his contributions at the Finance and Expenditure Committee and we hear that in the House as well. He is very detailed and thorough.Hon David Cunliffe: Greaser.PAUL GOLDSMITH: Indeed. So we are looking forward to his continued cooperation and guidance in the weeks and months to come. This bill the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill is just a piece of tax maintenance. Everybody knows that tax is not something that people necessarily want to pay more of than they need to so the ingenuity of individuals and businesses knows no bounds and with every new piece of tax law there is a new attempt to findsome way around it. There is a never-ending exercise of keeping up to speed with what is going on and this bill really follows on in that pattern.The main items that I want to focus on are the livestock valuation changes which will be of great interest and significance to those people living out in the areas beyond the Bombay Hills. The proposals in particular expand on legislation in Budget 2012 that provided that elections to use the herd scheme to value specified livestock are irrevocable unless an election to exit was made before 18 August 2011. There are generally two ways that farmers can value their livestock mainly beef and dairy cattle and sheep but also deer goats and pigs—Hon Member: Rabbits.PAUL GOLDSMITH: —at balance date for tax purposes. I am not sure about rabbits but certainly pigs and goats. The herd scheme treats livestock more as if they were a capital asset using national average market values with changes in values from year on year being a tax-free capital account.Farmers could elect out of the herd scheme with a short advance notice period. There can be legitimate reasons for electing out of the herd scheme and it is particularly the case if there is a change in the farming regime from breeding to fattening for which the cost-based regime is more apt. This bill explicitly recognises this by allowing an election to exit the herd scheme for a type of livestock when there has been a change in the fattening regime. But the proposed rules will require persons who acquire livestock from associated persons to use that associated person’s herd scheme election and base herd numbers if any. This associated person’s rule will apply to matrimonial property settlements and to the tax consequences of death. I think that is important. If that were left unchecked I think there would certainly be a continuation of some avoidance of tax in that way.I also want to speak briefly about assets and expenditure. When we dealt with holiday homes aircraft and boats in particular this was source of considerable discussion during the select committee phase. I think it is fair enough that everybody should pay their fair tax and for schemes where the private use of some assets is very significant and the actual income-earning use is insignificant then we should be more detailed and thorough in our way of taxing that.When we talk about fairness in general we should just remember nevertheless that three-quarters of income earners in New Zealand face a tax rate of less than 17.5 percent. We hear quite often from the other side of the House about tax cuts for the rich and so forth but again we should remind ourselves that every family in this country with two children and earning around $45000 to $50000 effectively pays no income tax in New Zealand.Sue Moroney: Thanks Labour.PAUL GOLDSMITH: We do not need to worry about the origins of it; that is the fact. So there is an enormous amount of redistribution going on in this tax system and continuing to maintain it in such a way that it still yields the dividends that are required is very much what this bill is about. On that basis I commend it to the House.