Parker David: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeParker David: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — In Committee[Sitting date: 17 June 2014. Volume:699;Page:18580. Text is incorporated into the Bound Volume.]Hon DAVID PARKER (Deputy Leader—Labour):I rise to take a call on Part 1 of the Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill which sets the annual rates of income tax payable by New Zealanders for the forthcoming year. Before we finalise our consideration of this part I would like the Minister of Revenue to take a call to explain what proportion of property transactions attract income tax under these provisions.The reason why I am interested in this is that at the Finance and Expenditure Committee on the financial review just a couple of weeks ago the Minister said that we have a capital gains tax in New Zealand. Well we actually do not but we do have some classes of property transaction that are taxed as income on the gain. So if you are a trader in property or if you buy with the disclosed intention to resell at a profit then that is on your income account and you pay income tax at the annual rates of tax that we are setting in this clause 3 in this Part 1 of this bill. At the select committee I challenged the Minister to tell me what proportion of property transactions are taxed in that way and having pontificated as he and his fellow members do that we already have some notional capital gains tax—according to them—he said that he did not know. So I then asked the Minister “Well do you know whether it is closer to zero percent of those property transactions than it is to 100 percent?” and he could not answer that either. We on this side know that it is closer to zero percent than it is to 100 percent but the Minister to give him credit said to the select committee at the financial review that he would answer what percentage of the investment properties that are bought and sold in New Zealand are taxed for their capital gain.I have not read that answer to the Finance and Expenditure Committee yet but I expect that this very assiduous Minister would want to know having recognised the failing of his knowledge at the select committee when he came to talk about tax policy and about why the Government should vote him money to run the Inland Revenue Department and given that we have got this rampant house price inflation and no capital gains tax. The capital gains tax has been a source of some controversy across the House with the National Government opposing it and the Opposition saying that we are in favour of it—a source of some controversy added to by the OECD saying that we need it and a source of controversy added to by the IMF another of the international advisers saying that we need it in New Zealand. So I would have thought that the Minister would at least want to know what percentage of existing property sales are actually caught by our income tax provisions already and therefore would not be caught by a capital gains tax. It would bolster his argument as to why we have not had it.I suspect that we are not going to get the Minister rising in this Chamber to take advantage of this heaven-sent opportunity to clarify for the country what percentage of investment properties are purchased and then onsold—people get tax deductibility for all the interest payments. They often offset their taxable losses against their other income. In fact in a recent year that investment class got a tax refund from other taxpayers because overall they ran at a loss but they still got taxed on their capital gains. So I am looking forward to the Minister leaping to his feet and telling us what percentage of sales of investment properties are taxed for their capital gains because I know that the percentage is far closer to zero than it is to 100 even if the Minister does not.