McClay Todd: General DebateText is incorporated into the Bound VolumeMcClay Todd: General Debate[Sitting date: 20 May 2015. Volume:705;Page:3464. Text is incorporated into the Bound Volume.]Hon TODD McCLAY (Minister of Revenue): Listening to that last intervention from the Hon Annette King made me feel so very very sorry for poor old David Cunliffe. Did you see what happened at the last election? All the members of the Labour Party on that side of the House deserted him as fast as they could. But when one looks at the last poll published around the country poor old David Cunliffe was polling higher on that day as preferred Prime Minister—and the Labour Party was also polling higher then than it is currently after the last 6 months—and certainly polling higher than their new leader Andrew Little is. Here is a prediction for you: very soon there will be a poll around the preferred Prime Minister that will show that the true Leader of the Opposition is the Rt Hon Winston Peters not Andrew Little because Andrew Little is going down and Winston Peters on that side of the House is going up.Do you know what? The reason for that is that the Labour Party has the shortest memory of any political party in the history of this country. I want to read this out. It is a statement that was made in this House not so long ago: “Much concern has been expressed about overinvesting in housing and the impact of the tax system in encouraging this.” It then goes on to say: “… I am mindful of the fact that under the current law investing in housing for the purpose of making a capital gain that is trading in housing is taxable. In order to underline the significance of this fact and to send a clear signal to housing investors about the purport of the current law it has been agreed between myself and the Commissioner of Inland Revenue that an additional $14.6 million [will be put in over 3 years to focus on housing tax compliance].” That was in 2007 under a Labour Government and it was Michael Cullen who said that.Well in 2010 under exactly the same law this National Government gave the Inland Revenue Department $33 million to look at property tax compliance. Over the last 5 years that has returned $258 million in additional tax. In 2013 we gave the department another $33 million and in the Budget tomorrow we will give an extra $29 million. Over the next 5 years the Inland Revenue Department will have $62 million to go out and focus on the current law which has been in place since the 1970s and it says that it will return about $420 million on that.We do believe that good tax law needs certain rules and taxpayers as well as the Inland Revenue Department need certainty. That is the reason that the Prime Minister announced that under the Budget there will be a number of changes. The first is that anybody who is purchasing a house in New Zealand other than their own home their principal place of residence will need to provide an Inland Revenue Department number at the time of purchase. A foreigner a non-tax resident will have to give us their tax information number from their own country. Secondly the non-tax resident will need to open a bank account in New Zealand before they can get an Inland Revenue Department number which means the full range of New Zealand’s anti - money-laundering laws will apply to them.I think it is reasonable that we know that anybody who wants to be involved in New Zealand pays their fair share of tax and that they are coming here with good intent. We are going to look to investigate and implement a withholding tax system so that those non-tax residents when they sell a property and are captured by the existing rules will have to pay that tax on the spot. The Inland Revenue Department will have the money. Non-tax residents will need to apply to get it back in cases where they feel that the tax is not due.On top of this we want to provide greater certainty and clarity to the taxpayer. Within the first 2 years with the exception of your family home your principal place of residence a home that you may have inherited or because of a marriage settlement there will be a brightline test that says if you have made a profit from a house that you have purchased and have sold you must pay tax on any gain. There will be a number of rules that we will work out around that. Good tax law is consulted on so we will be consulting on that before it comes before the House.The challenge in many parts of New Zealand and in Auckland is one of supply. We need good tax rules so that those who should be paying tax are paying it but the challenge is one of supply. In the last year or so we have gone from 14000 houses a year being built to 25000 houses a year being built and there will be 43000 additional houses able to be built under the special housing areas that Nick Smith has negotiated with parts of the country.The Government is focusing on supply. We are making sure that those who should be paying tax are paying tax. We are making sure that the rules are clear and are giving the Inland Revenue Department $62 million over 5 years for property compliance to make sure that all those who should be paying tax are paying it. Thank you.