Smith Lockwood: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
Smith Lockwood: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
[Volume:644;Page:13692] 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 This bill will be debated in four parts: the three parts of the bill plus the title. Part 1 which we debate now contains a number of key issues that National wishes to draw to the attention of the Committee of the whole House. The first issue relates to the setting of the annual tax rates. Some of my colleagues will focus on that issue because there is in fact a golden opportunity tonight for the Government to prove that it cares about the income tax rates. There is the opportunity tonight if the Government believes in reducing the tax rates to do so right now with this legislation because it sets the rates for this year. So if the Government is serious about reducing personal income tax rates it has the chance to do that right now. 
But I want to draw to the attention of members of the Committee the other issues that we will focus on in respect of Part 1 which contains a number of serious issues. The Government is about to introduce Supplementary Order Paper 167 in the name of the Hon Peter Dunne which will introduce new arrangements for the taxation of redundancy payments. Now that is a new proposal and it has not been to the Finance and Expenditure Committee. If it had been to the select committee there would have been submissions around such matters as why redundancy payments had been chosen and why lump-sum payments for accident compensation had not been included even though a person may receive a lump-sum payment for loss of income that covers more than 1 tax year just as is the case with redundancy payments. There is an even stronger argument for accident compensation lump-sum payments that cover more than 1 tax year to have tax relief in the same nature as that being given to redundancy payments. But no a Supplementary Order Paper was marched in at the last minute. We saw it only today. It has not been anywhere near a select committee. All of the issues that should have been covered before a Supplementary Order Paper comes to this Committee will not have been covered. Again colleagues of mine will discuss that issue. 
Supplementary Order Paper 167 also covers the vexed issue of finance leases. The Government sneaked into the select committee a while back Supplementary Order Paper 119 in the name of the Hon Peter Dunne. Government members did not even tell us it was retrospective and to do with finance leases versus operating leases; they tried to be all quiet about that. The Supplementary Order Paper caused a hell of an uproar because it would have put a whole lot of existing finance leases out of business and caused major problems for certain businesses in New Zealand. After the select committee heard submissions on Supplementary Order Paper 119 the Government withdrew it. What happened then? Government members marched into the Chamber today bringing Supplementary Order Paper 167 in amongst all the other papers. 
Supplementary Order Paper 167 sets out a new attempt to handle those leases. When I talked to the businesses involved I was advised that there are still major problems. There has not been adequate consultation. The provisions in Supplementary Order Paper 167 are a compromise I know but there is no need for that compromise. The Government could close the loophole going forward and not put existing deals out of business. But there is no doubt that if the proposals in Supplementary Order Paper 167 to do with finance leases go through tonight there will be business deals that are put out as a consequence of that. It is bad lawmaking when through retrospective legislation we interfere with deals that have been done in good faith under existing law. That is another issue we intend to debate in relation to Part 1. 
Then we get on to all sorts of other issues in Part 1. The issue of the research and development tax credits is covered in Part 1 and we will be making some comment about that. There is the issue of raising the threshold limit for charitable donations. We support that proposal; it was National Party policy. We will be covering that. There are also the issues about the change of name for Working for Families tax credits and of course the new KiwiSaver provisions for setting up the tax credit provisions for employers. 
We wish to cover in some detail all of those specific issues in Part 1 tonight. In fact we will be moving amendments on some of them tonight because they are so outrageous. The provision to change the taxation treatment of redundancy payments in isolation and in an ad hoc fashion has had no consideration by the select committee. It is just absurd to bring in a provision like that. The industry out there today is gobsmacked that there has been no chance to make submissions on that. Other issues could have been covered much more sensibly with a generic provision such as that. As I mentioned a moment ago my advice on new clause 78BB and the provisions on finance leases on Supplementary Order Paper 167 is that they will actually kill existing deals. There will be litigation. The Government should not be doing this. When the select committee looked at that issue in relation to Supplementary Order Paper 119 the Government withdrew that Supplementary Order Paper because it saw that it was a poorly thought through provision with far greater implications than the Government had assumed. As a consequence the Government withdrew that Supplementary Order Paper. 
It is not good enough to now march Supplementary Order Paper 167 into this Committee without scrutiny. The provisions on that Supplementary Order Paper will cause existing deals to be destroyed and for that to happen without the chance for scrutiny by the select committee is not good enough. That is what the provisions on Supplementary Order Paper 167 will do. I want to draw the attention of the Committee in particular to the new clause 78BB which is the bit that handles the finance leases; to new clause 85B which is the bit that handles the redundancy payments; and to new clause 155B which includes the tax administration amendments in respect of those redundancy payment provisions. None of those measures have been to the select committee and no submissions have been heard on them. They will have a major impact on New Zealanders businesses and ordinary taxpayers alike. There has been no chance for people to make submissions on that Supplementary Order Paper. 
This is no way to implement tax law. It actually undermines the good work I acknowledge that the Minister has done. The Hon Peter Dunne has put out a discussion document and gone through a reasonable process then undermined it at the last minute with Supplementary Order Papers containing provisions that were not adequately consulted on and that no submissions have been heard on. I appeal to the Minister. We will be proposing a number of amendments tonight one of which will be in relation to the redundancy payment provisions on Supplementary Order Paper 167. I would like the Minister to seriously reflect on the fact that there has been no chance for submissions to be heard on them. Thorough consideration should be given to them tonight.