Tabuteau Fletcher: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In CommitteeText is incorporated into the Bound VolumeTabuteau Fletcher: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In Committee[Sitting date: 12 April 2016. Volume:713;Page:10392. Text is incorporated into the Bound Volume.]FLETCHER TABUTEAU (NZ First): I rise to oppose this part of the legislation and I just want to underscore and talk about where we have come from to get to this point. In my opinion this is the third part of what is a broken attempt on the part of this Government to basically claim that it is fixing up the issue of overseas speculators buying up New Zealand homes. Of course I am speaking specifically to Part 2 of the legislation and the amendments to the Income Tax Act.What we do know is that Aucklanders are now paying record prices for their homes. In terms of context it is from the previous two bits of legislation which are supposedly the panacea to this problem that we come to this third bit. But from the two pieces of legislation that have already been implemented—because this one only seeks to establish how those payments are to be calculated and paid on the part of those overseas speculators—we have already seen that the brightline legislation does not work. How do I know that? Because over the months leading up to Christmas and to the New Year we saw the legislation implemented and actually we saw a slight downturn in terms of purchases of Auckland homes from overseas speculators. We saw that. What we saw though was overseas speculators actually just trying to figure out what the legislation meant to them.Basically what they saw was that they only need to get an IRD number and that is it and they can still carry on with that speculation and profit out of the Auckland housing market because the requirements on them are minimal and make no substantive changes to what they are trying to do which is use Kiwis’ homes as a profit mechanism. That is the gist of it. Kiwi homes are being used by overseas speculators for them to make money. New Zealand First insists that it is not fair and it is not acceptable and we have also consistently said that this legislation will not work.Here for example is this bill the Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill. We actually support two-thirds of this legislation and we voted for the first part accordingly but the reality is that the opportunity is here and now for the Committee and for Minister Woodhouse to perhaps break up this legislation—break it up so that New Zealand First can vote for common-sense parts of the legislation. For instance we acknowledge that we do need to hold student debtors accountable. I think that in contrast to topical issues around tax and trusts at the moment it is harsh and heavy-handed—but here we are. It is a solution and what we hold for one student we must hold for another; it does not matter where they are residing.I turn specifically to the amendments to the Income Tax Act which outline the grounds on which payment should be made. Generally speaking even after all the law changes to supposedly slow speculation in Auckland recent statistics—I say again—have proven that there has been a minimal effect or actually no effect on that speculation.What I want to point out at this stage—it is very general I acknowledge and I will come to the specifics of the legislation—in this opportunity to speak to the Committee is that tax experts came back to the select committee after the alterations and amendments and basically said to the committee—well not basically; they said it outright—that this part of the legislation this residential land withholding tax will not work. They said it to our faces and basically they said it in several ways. They said that those who wish to speculate on New Zealand property and profit from it will adjust their behaviour ever so slightly—in that they referred to the 2-year time period. They will just wait—they will wait and they will make more money on it if that is their wont and they will adjust their behaviour.The other part is that if you look at the statistics and the money generated from this legislation—and here is the rub—this tax revenue legislation bill will in fact according to KPMG and others accrue a negative net revenue to the Government. It will be a negative tax take—that is what this tax legislation will achieve upon its implementation once we establish who is liable and how they are going to pay. There are a whole lot of issues in how we determine who is liable and how they are going to pay but we will come to those later.The tax experts gave numbers in line with the Inland Revenue Department’s own analysis which suggested anywhere between $1 million and $5 million in terms of revenue-gathering from this legislation. Five million dollars sounds like a lot but we know that in terms of—I mean that is one house in Auckland at the moment is it not? It is next to nothing; it is ludicrous. Then they put the obvious to us and said that there is a cost in gathering this revenue. What you will find when you juxtapose cost to revenue as a good accountant is wont to do is that the actual return to the Government coffers will be negative—for a piece of legislation that we have been told will not work because behaviour from speculators will change. New Zealand First cannot and will not support absolutely farcical measures—if you do not mind the language—in terms of a Government standing up and essentially saying it will do something about this and in fact it knows full well it will not achieve any of the stated objectives that it has set out before us today. Thank you.