Wood MichaelMICHAEL WOOD (Labour—Mt Roskill): Thank you Mr Assistant Speaker for the opportunity to speak on the Taxation (Annual Rates for 2017-18 Employment and Investment Income and Remedial Matters) Bill. I rise to speak to the bill on behalf of the Labour Party and it is the intention of Labour to support this bill to the select committee stage at which point we think it is very appropriate for a number of the matters that have been flagged by the Minister of Revenue within the bill to be very very closely examined—and I thank the Minister for her attention to the debate that is going on at the moment.One of the things that is important to be aware of with this bill and many of the other large tax bills that are coming the House's way this year is that they are sprawling beasts and this bill—by my adding up here—amends at least six Acts in reasonably important ways: the Income Tax Act 2007 the Tax Administration Act 1994 the KiwiSaver Act 2006 the Student Loan Scheme Act 2011 the Goods and Services Tax Act 1985 the Child Support Act 1991 the Accident Compensation Act 2001 and the Income Tax Act 2004. So there are potentially a lot of impacts flowing from this bill and a lot of the detail is very very complex so we think it is going to be extremely important that when this bill goes to select committee it receives a thorough examination—and as I stand here I notice the upstanding and hard-working chair of our committee Mr Chris Bishop coming into the House with rapt attention to this debate and I look forward to working on the bill with him in the committee.There are four broad aspects to this bill. The first is that it sets the 2017-18 income tax rates. Secondly there are a range of changes that focus on the business reporting of tax information—a lot of these are related to the business transformation process that the Minister spoke about in her speech. There are some very substantial changes to the treatment of employee share schemes and I want to return to those a little bit later. Then there are various remedial matters as we always get with these bills.I want to start off with the rates and they were really the unspoken story when we just heard from the Minister of Revenue but they will be of some interest to the 3 million or so New Zealand taxpayers out there who want some clarity on what their income tax rates will be for the year ahead. Of course it is a little bit interesting because it was not that long ago that we stood in this House—I think probably only about 5 or 6 weeks ago—to actually confirm the rates for the 2016-17 year. It was a bit of a last-minute dash. I think we ended up with about 2 or 3 days—Chris Bishop: Ha ha!MICHAEL WOOD: —before the end of the financial year. Mr Bishop knows how concerned the Labour Party is about this. I know that he will be committed to having a more orderly process this year and perhaps he can speak to the Leader of the House about ensuring that that unfolds over the coming months.It is notable of course that the rates in this bill are simply a repeat a rehash of the current year's rates and they are being put to this House days before a Budget in which the Minister has been foreshadowing and really pumping up the expectation of some pretty significant changes in the income tax space. All I can say in that area is that I hope those members do a better job than they did the last time that they looked at New Zealand's income tax rates because the last time they did that right at the beginning of this National Government the changes that they made shifted income distribution in this country vastly to the advantage of the top 10 percent of wage and salary earners. I think that when you listen to people out in our communities at the moment people are looking for a Budget that has fairness at its core and if we see changes to income tax rates that again significantly weight those advantages and that additional income to the top 10 percent of income earners as happened the last time the National Government changed income tax rates there is going to be a huge backlash.More broadly though in respect of tax rates I guess the view of the Labour Party is that that ongoing tinkering with the tax system that we are getting from the National Government—that is what we expect to see in the coming week—simply is not good enough. Over a long period of time we have had a build-up of substantial imbalances in our tax system and simply reconfirming the income tax rates for the year or looking at the thresholds as we might hear about on Thursday does not really resolve the big issues in our economy and our society that stem from those imbalances in our tax system.I know many members in this House might have heard about the book Tax and Fairness which has come out over the last week or two. Look a very well-qualified extremely intelligent author Dr Deborah Russell Labour's candidate for the seat of New Lynn is one of the authors along with Terry Baucher and it really is worth a read. I am only about halfway through it but what it does is it really delves into the substantial issues in our tax system and points to this fact that just fiddling with thresholds is not going to be enough. It points to the fact for example that the tax treatment of people who put their wealth into productive investment and savings versus those who put their income into property speculation is vastly different—is vastly different. If the Government when it is putting forward a tax bill like this which deals with the tax treatment of certain kinds of investments really wanted to invest in a productive economy that is one of the things that it could look at because what Deborah Russell says is that the tax burden on those people who put their wealth into productive investments is four times that of the tax burden of those people—and who knows there may even be some of them on the benches opposite—who put their wealth into property speculation.That goes to the housing crisis that affects so many New Zealanders today and it goes to the fundamental economic settings and incentives in our economy as well and if we ever really want to climb up that mountain that we talk about year in year out in this House about building a high-wage high-skill economy with high rates of R & D in which we have world-class living standards we are going to have to effect that shift at some stage. If we keep ploughing our wealth into property and if we keep having a tax system that incentivises us to do that we simply will never get there. Once again we have a tax bill that a lot of work has gone into—a lot of institutional knowledge from IRD and a lot of research and a lot of time will be spent a lot of submissions—and we are just tinkering around the edges. We are not dealing with those very very fundamental issues.So that is something that Labour wants to see and what Labour will deliver is a shift—looking at the fundamental drivers of the tax system and rebalancing it to ensure that we are incentivising the right kinds of investments.While we are on it we wait with great interest and again there is nothing in this tax bill to ensure that while Kiwi taxpayers who are of course paying their tax diligently at the rates set down in this bill—we are seeing multinationals in New Zealand getting away with ripping off the Kiwi taxpayer to the tune of between $300 million by the Government's own estimates and up to $1 billion per year by some other estimates. Once again though we have a tax bill that does not begin to touch on that and we have absolutely no certainty that the Government has any intention whatsoever of progressing action in that area before this election. There is a lot of hui not much doey.The ASSISTANT SPEAKER (Lindsay Tisch): Order! Come back to the bill.MICHAEL WOOD: Certainly Mr Assistant Speaker. I know that the members opposite are eager to hear more information and I am happy to provide it. One of the concerns we have with the bill and one of the aspects we seek to explore further in select committee is the extent of the shift to pre-population that is set out in this bill and it is mentioned many many times in the commentary. Many people in the tax community really want to know where this is going because at first blush IRD having better information earlier on in the piece sounds like a good idea. We can all agree that is a good idea and we can all agree that it probably is a good idea for that information to be used to pre-populate people's tax returns. But there are many people in the tax community who are asking whether this is taking us back in the direction of compulsory filing of tax returns. There are certain signals—bits of smoke that seem to come out of IRD—that seem to suggest that this might be the case and that is something that we will want to explore further in the select committee process.I want to turn now to the changes proposed to employee share schemes. Most of us in this House will agree that employee share schemes are a really valuable tool for recognising employees for putting incentives in place for giving people a stake in growing companies. We want to support not just their retention but their growth under the right circumstances. Probably the most significant changes proposed in this bill are the treatment of those employee share schemes. Effectively the changes proposed are to further date when employees acquire the shares for tax purposes. It is a major major change and there is already a lot of chatter amongst businesses and amongst the tax community about how this may affect the attractiveness of employee share schemes. This is not the time and place to go into all of the detail there but once again on behalf of the Labour Party I would flag up that that is an area we want to spend some real time on at select committee. We cannot afford to get that wrong or we are really going to rock the boat on an area that is quite important in terms of incentives in many of our businesses.Once again the Labour Party will be supporting this bill in its first reading and we look forward to further discussion and good quality debate at select committee. Thank you.