Prebble Richard: Taxation (Base Maintenance  and Miscellaneous Provisions) Bill — Second Reading 
Prebble Richard: Taxation (Base Maintenance  and Miscellaneous Provisions) Bill — Second Reading 
[Volume:626;Page:21440] 
Hon RICHARD PREBBLE (ACT) 
: 
 I rise on behalf of the ACT party to speak to the Taxation (Base Maintenance and Miscellaneous Provisions) Bill which is a bill typical of tax bills that Governments have been introducing into the New Zealand Parliament I guess most years. It is full of very complicated technical amendments to meet what are seen as various anomalies and loopholes in the tax system. 
Before I turn my attention to that let me just immediately respond to what I think were some fairly ludicrous remarks from the New Zealand First Party. If one had listened to the New Zealand First member one would have heard him say that what is appalling and a matter of great concern is that banks in New Zealand are profitable. So I guess New Zealand First’s position is that it would be wonderful if New Zealand banks were making no money were unsound and the value of their assets—the last speaker was concerned that it had gone up—were falling. 
Hon Harry Duynhoven 
: We were there once. 
Hon RICHARD PREBBLE 
: That appears to be the last speaker’s position. I just say to the honourable member that as Mr Duynhoven has said that situation has actually happened in New Zealand. What happened? When banks fail the effects have been disastrous. I still remember the effect of DFC failing—a tiny bank and financial institution in this country. Did it have huge implications? Yes it did and innocent New Zealanders whose only fault was that they were dealing with the DFC found themselves wiped out. But New Zealand First would have us believe that that somehow is a better situation. Well that is absurd. 
It also needs to be said because there have been certain remarks made about banks although not so much by the honourable member—remarks generally about this legislation—that those banks in New Zealand that have taken advantage of some clever management of their assets and have taken various steps have actually done nothing illegal. Indeed it became clear and officials admitted it in front of the Finance and Expenditure Committee that the banks had actually been to the Inland Revenue Department and received approval for those arrangements. It has never been regarded as in any way illegal or immoral for a taxpayer to seek to minimise the amount of tax that he or she pays. Although that New Zealand First member may be fairly silly and immature in his views on banking I guarantee that he actually does not pay any more tax than he needs to—unless he is even sillier than I think. If he personally sees nothing wrong with his minimising his tax there is actually nothing wrong with the banks in New Zealand doing that. 
Indeed I might even go further. One could argue that a strong banking sector is so important for a nation that we ought to be a little bit careful before we go pursuing it hard for income tax. When we actually look at what the banks have been doing in the last decade we see they have been able to collect a large amount of money from overseas investors and lend it to New Zealanders because we have not been saving enough. Again I hear people complain about that. Well they should think about the alternative. Are they really saying they do not want our banks to lend on mortgages and the like in the way that they have done? 
Having said that let me now turn to the bill itself. The ACT party will not vote against the bill and the reason is that most of these measures actually have been consulted on widely with the accounting profession which sort of acts as the informal collector of tax for the Inland Revenue Department in New Zealand. They have been consulted on with the various organisations that are involved and there is grudging support within the community for the measures because they are needed for the integrity of the tax system. 
Having said that and having also said that for that reason ACT will not vote against the bill I say we are actually opposed to this type of tax legislation because some of the measures contained in this bill are police-State powers. The Inland Revenue Department is given huge powers under this bill and it is given those powers because it is quite impossible to collect the amount of tax that the New Zealand Government demands without these sorts of measures. If these measures were appearing in any other legislation except tax legislation the whole House—even the Greens; well maybe not; they tell me that they are so unworried about this sort of tax bill that they are not even going to debate it; perhaps I should not speak on behalf of the Greens—every other political party except the Greens would be outraged. They would be outraged at measures being put before the House that stated that civil servants were entitled to go into one’s bank accounts entitled to order one to produce documents entitled to make declarations as to how much tax one has to pay—and unless one can prove to the contrary one has to pay it—and also entitled to make arbitrary statements about how one’s income should be dealt with when in fact that may not have been what one had intended. 
One of the reasons that tax laws are getting more complicated is that we are in a global economy. Indeed the banking system falls a bit into that—these debt deals were done internationally. So the New Zealand Inland Revenue Department to try to protect the tax base is finding itself having to pass very complicated laws in order to try to pursue people’s income around the world. I think that is an exercise in futility; that in fact the Government will fail. The Government will be able to collect the money from—if I can put it like this—the little people. It will be able to collect tax from those who pay wages and salaries because the Inland Revenue Department can pursue such people. But if one has real money then one has the ability to determine when one earned it. One of the problems the Inland Revenue Department has is that it is very difficult when one talks about a large sum of money to decide whether it is capital or income and—if people have the ability to move the money around the world—when people actually earned it. The Government will never succeed and what we will have is more and more legislation like this. This is 170 pages of tax legislation with police-State type of measures. 
It is time that we actually looked at some alternatives. Mr Duynhoven mentioned a number of European nations and their tax systems but what he failed to mention was the spectacular success that the Eastern European nations that have just joined the European Union have had by simplifying their tax systems and adopting what are very low flat rates of tax—down to 16c. Of course if we were to adopt a very low rate of flat tax down to 15c—[ 
Interruption 
] The member who claims to be an inland revenue Minister should start reading some of the literature. He would discover that nations that have done that—and I went to a lecture in this city by a leading tax professor who was giving data on what had happened in those Eastern European nations—have maintained their tax revenue. It has worked spectacularly well. They do not need to have junior Ministers passing legislation of the kind that the Nazis used to pass—and I am not suggesting that the member is a Nazi. 
This is a police State. These are police-State measures. People’s basic liberties are taken away in this measure. Our House as one can tell by the numbers will blindly pass the bill when the real solution is to go to a low flat rate of tax and restore our liberties.