Cullen Michael: Income Tax Bill — In Committee Third Reading 
Cullen Michael: Income Tax Bill — In Committee Third Reading 
[Volume:641;Page:11272] 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I thank the member. I think he started off quite well but unfortunately he started to deteriorate reasonably quickly in that speech. 
Let me say that this Income Tax Bill is part of a historic process that was begun if my memory serves me correctly by Wyatt Creech as Minister of Revenue. It is an attempt to rewrite the entire Income Tax Act. A number of other jurisdictions have attempted to do this such as the United Kingdom and Australia. No other jurisdiction has succeeded in this enterprise. That probably in part reflects the fact that despite what the member has just been saying actually the New Zealand Income Tax Act by international standards is relatively simple. 
The corresponding legislation in the United States runs to some 20000 pages whereas this bill is around 2500 pages. I think the United Kingdom legislation is somewhere around 8000 pages from memory. Not surprisingly the attempt to rewrite it has failed in those jurisdictions. That means that they have missed the opportunity to present legislation in a much simpler form in terms of its organisation in a much more logical structure and as far as one can in a much more plain-English approach in the expression of the language within the legislation. 
As we move on from here particularly with the Public Access to Legislation programme coming into force there will be the ability to update legislation much more quickly and on a much more user-friendly basis than by having the old bits of sticky paper stuck inside the volumes which we have been accustomed to for a very long time in New Zealand. The project has been carried on under a very large number of revenue Ministers of which I think Mr English was briefly one and Mr David Carter was another. I think even Mr Ryall had his sticky fingers in the revenue pot at one point. There was myself and Mr Dunne—indeed it was Mr Dunne twice because Mr Dunne was the Minister of Revenue in 1995 and 1996. So there have been a lot of Ministers and the Inland Revenue Department has managed to maintain resources all the way through to carry out this exercise which was not an easy one. 
As the member rightly says there is still a lot of complexity in the legislation. That is inevitable. In an increasingly sophisticated international environment in terms of income and economies tax law cannot be made very very simple at all unless of course one has the simplest kind of tax law which simply gives the department and the Minister an entire discretion in terms of determining how the tax law should operate. But generally speaking in New Zealand we tend to adopt a reasonably brightline black-letter approach to taxation law. One can argue whether that is in fact the best approach but it tends to be the approach we have adopted within New Zealand. Therefore that means having to have a degree of complexity particularly as avoidance mechanisms become more and more sophisticated and tax law has to write its way around those sophisticated mechanisms. 
The bill is not in fact in 26 parts because as members will see although it goes from Part A to Part Z a number of parts are not actually there because for various reasons they have lapsed as the rewriting process has occurred. It is laid out in a very simple fashion in terms of the organisation. “Purpose and interpretation” is first then comes “Core provisions” “Income” and “Deductions”. Basically for most people that is it. Parts A to D really cover the great bulk of the interaction of the public with the income tax system because from there on we are getting into the complex parts which relate largely to the commercial sector. Those are such things as timing and quantifying rules recharacterisation of certain commercial arrangements avoidance and non-market transactions taxation of certain entities and so on and so forth. 
Of course as I think members on all sides will recognise most people do not actually come within that part of the Income Tax Act at all. They come within the first part “Income” provisions and “Deductions”—and they are lucky if they get deductions these days. That is pretty much it as far as most people are concerned. 
I would hope that the debate tries to address some of the issues of principle within taxation legislation and the details as articulated within this particular bill. There is a very large Supplementary Order Paper and I am grateful to the House for its agreement to deal with the third reading of the bill by starting that immediately after the Committee stage. Otherwise it would be necessary to reprint the whole bill for the third reading to proceed and that in itself would take many many weeks. 
The intention is that on the completion of the Committee stage and the moving of the third reading which will be sought to be adjourned immediately the House will return to the third reading on I think 25 October— 
Hon Bill English 
: Can you just run through that again? 
Hon Dr MICHAEL CULLEN 
: The bill on completion of the Committee stage will be set down for third reading forthwith. The Minister—or if he is not here probably myself—will move the third reading but not speak to that and will instead seek leave to adjourn the debate immediately so that there is no debate. That is to avoid having to reprint the whole bill with the Supplementary Order Paper before we get to the third reading which would be many weeks of work and a huge amount of printing as one can imagine. 
Then we will come back to the third reading on 25 October which is the last Thursday in a sitting period. This will give the Clerk’s Office the time to prepare a clean version of the bill ready for passage so that the clean copy can then be taken as quickly as possible to the Governor-General for assent because no other third reading that has been passed after this one can be dealt with until this one has been prepared in a clean copy. 
That is the reason for this slightly strange procedure which the Business Committee has agreed to and which the House has in effect supported. I am extremely grateful for that because it means we can deal with this important achievement for successive Governments in a logical and coherent fashion and as efficiently as possible without creating a great deal of additional expense in reprinting along the way.