Nash Stuart: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee Third Reading 
Nash Stuart: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee Third Reading 
[Volume:657;Page:6655] 
STUART NASH (Labour) 
: 
 I rise in support of the Taxation (International Taxation Life Insurance and Remedial Matters) Bill. The irony has not escaped me or members of the Labour team that we are finally passing this bill under urgency because the bill has a retrospective provision that goes back to 1986. Yes the Inland Revenue Department has caught up with a legal tax problem that had slipped under the radar for 23 years and remained unamended. It relates to the Parliamentary Service and is deemed to apply from 1 April 1986. It is rather fitting then that this bill is included in the urgency motion. As we have discussed for the first time this week an urgency motion is justified because it is appropriate to provide certainty to those who will be affected by this bill. There is no doubt that the passing of this legislation will provide that level of certainty to a whole range of industries that demand it. 
I start by reiterating the tests that tax legislation has to meet. There are basically four tests. First and foremost it has to be effective and it must not hinder growth. Ideally it should promote growth. It would be a grand bonus if all aspects of this bill when implemented would in fact help the long-term sustainability and economic development of our economy both domestically and on the international scene. It allows us to build on a competitive advantage and as mentioned in this day and age of globalisation a tax bill that meets the international standards is very important. This bill does that. Secondly there must be equity. This is the question around who bears the burden of taxes. It cannot place an unfair burden on those for whom there is no equal advantage. For example we cannot be seen to take from Peter to give to Paul. 
Of course I would argue that the Government’s tax cuts for the upper end of taxpayers and the proposal mooted by the Tax Working Group to raise GST so as to be able to lower tax at the top rate does not meet this equity test especially if we extend this test to include social equity which is something the Labour Party has done with every bill in its 94-year history. In fact Harry Holland the first leader of the Labour Party had a very simple test. He always asked “Is it right?”. Harry Holland realised that if it was right for the people of New Zealand it would be right for the New Zealand Labour Party. This underlying principle of whether it was right for the people of New Zealand has guided this party long after Harry’s untimely departure from this world and it will continue to guide the Labour Party under the leadership of Phil Goff the next Prime Minister of New Zealand. 
The third requirement is that any tax legislation has to have fiscal integrity. By this I mean that tax legislation cannot provide incentives for people to restructure their affairs in order to perpetrate tax avoidance. As I mentioned during the Committee stage it was Dr Michael Cullen—who I think was the Minister initially in charge of this bill; if it was the Hon Peter Dunne I apologise to him—who said that if as much intellectual energy grunt and capacity went into increasing the productive wealth of the economy that is now directed into perfecting the art of tax avoidance then we would be a very wealthy nation. I am sure that at some stage we will be back in this House with amendments to this bill. We simply cannot have a bill that is over 800 pages long without the odd error. Goodness knows that the officials consultants and even some of the submitters went to extraordinary lengths to ensure that every possible loophole was identified tested and closed. But as we all know and as is testament to Dr Cullen’s comment—and he was in the House a lot longer than any other members present have been or will be—there will be some smart person out there looking to make his or her reputation at the expense of the greater good by looking for a way to rip off the tax system. My message to that person is that we will close these down as soon as they even think about beginning to appear. Tax legislation is an organic beast and it must be for ever growing and adapting transforming to meet the requirements of the international and domestic users of our system. This bill is testament to that fact. 
The fourth point relates to compliance and administration. Citizens must understand their rights or it must be relatively simple for citizens to be able to access information that will inform them of their rights. Compliance costs should be kept to a minimum without compromising the integrity of the system. I refer back to the 800-page income tax rewrite of 2000 which was part of this compliance and administration test. In fact one of the notable features of this bill is that it introduces significant reductions in compliance costs and thresholds for a whole range of businesses in the tax system as they apply to small and medium sized enterprises. 
We all know that this bill started life as a Labour Government bill. We certainly know that Labour is the party of the small to medium sized enterprise business sector. 
Louise Upston 
: Since when? 
STUART NASH 
: We have only to look back a couple of years. Labour was the only Government in the last 30 years to lower the company tax rates. In fact the last time a Labour Government lowered the corporate tax rate every National MP voted against it. How did National MPs go out and sell that to their business constituents? I say once again that Labour is the only Government to have lowered the corporate tax rate in 30 years and both times every National MP voted against it. It is unbelievable. 
Compliance and administration is also one of the reasons why there are over 300 amendments to other tax legislation that have arisen out of the rewrite into plain English and that are now incorporated back into this bill. As mentioned I know the terms “tax legislation” and “plain English” sound rather odd together in the same sentence. However this is what the Inland Revenue Department has attempted to do and I think it has done a sterling job. As I said of course one cannot avoid a certain amount of complexity in a tax bill of over 800 pages but this has been kept to an absolute minimum whilst ensuring legislative integrity. 
Finally any tax legislation needs to take into account fiscal implications. By this I mean how much revenue it will bring in how much it will cost the Government and the cost-benefit analysis around this whole thing. Obviously in any tax legislation let alone a bill of this size there will be fiscal implications right across the tax base. The Finance and Expenditure Committee Inland Revenue Department staff and advisers and consultants endeavoured to quantify these implications and ensure that the benefit to the economy absolutely outweighed any fiscal costs while ensuring any fiscal benefit in some areas met the other four tests around equity efficiency etc. 
When the select committee approached the deliberation of this bill we had to take these points into account. I reiterate however that due to the size of this bill the depth and breadth of the material covered and the time constraints under which the committee operated it was difficult to give each separate section due consideration debate and consultation. However I believe we did that to the best of our ability. It was difficult but we did it. The bill that will be passed tonight meets the vital tests associated with any tax legislation and this is why I very much support its passage into law. Thank you.