Robertson Grant: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeRobertson Grant: Oral Questions — Questions to Ministers[Sitting date: 05 April 2016. Volume:712;Page:10152. Text is incorporated into the Bound Volume.]9.GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Revenue: Has he sought advice from the Treasury on the impact of multinational company tax avoidance on the Government’s fiscal position; if so what was the advice he received?Hon MICHAEL WOODHOUSE (Minister of Revenue): As I explained to the House during question time last week the Inland Revenue Department (IRD) does not distinguish on the basis of whether companies are multinational or not. Treasury and the IRD do provide estimates of revenue gains from specific policy initiatives—for example GST on online services and intangibles. Tax avoidance where companies are not paying what they legally owe is cracked down on. I expect all companies to pay the correct amount of tax on their net taxable income regardless of where they are owned.Grant Robertson: I raise a point of order Mr Speaker. The question asked the Minister whether he had sought advice. He offered some views about what Treasury and the IRD might or might not do but he did not answer that part of the question.Mr SPEAKER: On this occasion I do not believe that answer has adequately addressed the question. It was an attempt to answer it and the Minister is responsible for his answer. The way forward is to allow the member two extra supplementary questions.Grant Robertson: Thank you Mr Speaker. Has he sought advice from Treasury on the quantum of multinational company tax avoidance and its impact on the fiscal position of the Government?Hon MICHAEL WOODHOUSE: The question cannot be answered in the way the member asks. [Interruption]Mr SPEAKER: Order! The question has been asked. It does not require a commentary now as the answer is being given.Hon MICHAEL WOODHOUSE: It would require the IRD to make an assessment of a fact that it does not know. It is a quantum question to something that is not known. What I expect is that it works diligently to ensure that all organisations and individuals pay their fair share of tax and I am satisfied it is doing that.Grant Robertson: I will do it slowly: has he sought advice from Treasury on the quantum of multinational tax avoidance and its impact on the Government’s fiscal position?Hon MICHAEL WOODHOUSE: Slowly—no because asking such a question would be a ridiculous waste of the IRD’s time because you would be asking it to chase its tail.Grant Robertson: How is it responsible for the Government to have not asked its chief financial advisers to quantify the impact of multinational tax avoidance on its overall fiscal position when estimates range into the multibillion-dollar area?Hon MICHAEL WOODHOUSE: Estimates are just that. They are fingers in the air based on people’s value judgments about what organisations that have certain turnovers in this country should be paying on tax and I cannot remind that party often enough—they do not seem to get it. New Zealand entities do not pay tax on their gross revenue. They pay it on their net taxable income and I am satisfied that that is what they are doing.Grant Robertson: How does he defend his failure to even quantify the scale of multinational tax avoidance to a small-business owner who is working hard doing the right thing and paying their fair share of taxes—or would he rather join the Prime Minister on the side of mega rich tax dodgers?Mr SPEAKER: The last part of the question is out of order. The first part can certainly be answered.Hon MICHAEL WOODHOUSE: I encourage the member to take a slightly broader perspective on this issue. There is a number of large companies that use their New Zealand - based entities as a means of getting product into New Zealand. Along the retail pipeline for example products like—I do not know—fuel would be then retailed by companies in New Zealand that pay the tax. The analogy would then be for say Silver Fern Farms selling lamb to London to have to pay UK tax. It is not; Waitrose is Asda is.Grant Robertson: What credibility can New Zealand have in being part of international discussions about cracking down on multilateral tax avoidance when it emerges that we are in the club of 21 tax havens revealed as part of the Panama Papers and his Government refuses to acknowledge that that is even a problem?Hon MICHAEL WOODHOUSE: It is not for me to re-answer the very good answers that were given by the Prime Minister to his questions. Suffice it to say I agree that New Zealand is not a tax haven when the definition of such is absolute secrecy. Quite the opposite is the case. But I would also remind the member that to the degree that there is multinational tax avoidance taking place this is a global problem that requires a global solution which is why we are working with the OECD.Grant Robertson: Can he not see that New Zealand’s ability to argue for our fair share from multinationals is fatally compromised by his Government siding with the mega rich tax dodgers who are exploiting our trust laws or is that actually an intentional policy so that lawyers and accountants can get some money and our reputation gets trashed?Hon MICHAEL WOODHOUSE: The question simply does not warrant a response but I will say this: the member needs to be careful what he wishes for. Silver Fern Farms selling lambs into England and Fonterra selling formula into China would on the regime that that member suggests be liable for tax in those countries. Our responsibility is to ensure everybody pays their fair share of tax in New Zealand. This Government deployed $20 million to ensure that that was happening and I am satisfied that that is money well spent.Grant Robertson: Why did he not respond to the IRD’s statement to his predecessor in 2013: “To protect our international reputation it may be necessary to strengthen our regulatory framework for disclosure and recordkeeping.”? Why did the Government not respond to that warning?Hon MICHAEL WOODHOUSE: The question is now delving back into the area of foreign trusts not base erosion and profit shifting by multinationals but I am satisfied that the IRD is nimble in making the changes to things like the thin capitalisation rules the permanent establishment rules the non-resident withholding tax rules and rules for GST on online purchases that ensure the maintenance of this country’s revenue base.