Goldsmith Paul: Taxation (International Investment and Remedial Matters) Bill — Third Reading 
Text is incorporated into the Bound Volume 
Goldsmith Paul: Taxation (International Investment and Remedial Matters) Bill — Third Reading 
[Sitting date: 05 April 2012. Volume:679;Page:1765. Text is incorporated into the Bound Volume.] 
PAUL GOLDSMITH (National) 
: 
 I am very pleased to speak in favour of this bill the Taxation (International Investment and Remedial Matters) Bill. I am very relieved to hear that the Green Party does accept that at least some foreign investment is good for the economy. I just wish it did not have quite so much faith in the ability of bureaucrats to decide unerringly what good investment is and what bad investment is. You know I think the power of the market and the millions of voluntary decisions that people make every day about what they want to buy and what they do not buy is generally a more accurate description of how things go. 
The centrepiece of the Budget of 2010 was the delivery of the major tax package reforming the tax system to make it more sustainable and a better support for economic growth. This bill falls into our tax reforms and promotes integrity across the tax system. It builds on and extends earlier international tax reforms. The main proposal is to extend the active income exemption introduced in 2009 to offshore subsidiaries so that it also applies to joint ventures and other significant shareholding in foreign companies that are not controlled by New Zealanders. 
This is a formidably complicated area of law where the more fundamental law of unintended consequences usually predominates. The fact that we as members have to rely on the advice of officials so heavily in the development and wording of this kind of legislation only adds I think to the danger of passing international tax laws. We did that in the 1980s and 1990s and they had their own internal logic but since the rest of the world did not follow it proved disadvantageous to a lot of New Zealand businesses and the economy. 
So the point of this bill particularly in relation to the active income exemption is that it brings New Zealand’s tax rules into line with the practice of other countries. This gets us on to safer ground I believe and will help New Zealand - based businesses compete more effectively in foreign markets by freeing them from tax costs that similar companies based in other countries do not face. So it will improve the competitiveness of New Zealand’s tax system and encourage businesses with international operations to remain establish and expand and that is what we need. 
Why is that important? Because we want New Zealand businesses to grow into international businesses based in New Zealand. That is how we build an economy and earn the money we need to maintain the living standards we all aspire to. The tax laws have frequently made that very difficult in the past and in some instances have added to the pressure for companies just to leave New Zealand or more frequently just not to attempt international expansion. So if we can help in that area all to the better. I think I will leave it at that. I commend this bill to the House.