Bond Ria: Taxation (Transformation: First Phase Simplification and Other Measures) Bill — Second ReadingText is incorporated into the Bound VolumeBond Ria: Taxation (Transformation: First Phase Simplification and Other Measures) Bill — Second Reading[Sitting date: 12 April 2016. Volume:713;Page:10430. Text is incorporated into the Bound Volume.]RIA BOND (NZ First): It is a pleasure to stand and speak to the Taxation (Transformation: First Phase Simplification and Other Measures) Bill on behalf of my colleague Fletcher Tabuteau tonight.I wish to begin by commending the Finance and Expenditure Committee for a detailed and comprehensive analysis and commentary on another Government taxation bill which amends a total of eight Acts. It is extremely important that an omnibus bill passing through this House contains no errors oversights or unintended consequences. This bill aims to transform simplify and improve the administration of our taxation system and how the Inland Revenue Department (IRD) engages and interacts with taxpayers. The main policy measures in this bill provide for easier communication with and by the IRD simplified tax rules and the sharing of information.During the second reading I would like to address a number of those policy measures on behalf of New Zealand First. During the first reading New Zealand First expressed concerns about how the co-location of IRD staff with other Government departments might impact on the security of personal information and data. The select committee’s report identifies a number of options that were considered by the committee to ensure the secrecy and safety of taxpayer information. It noted that clause 117 in the bill as drafted might have incentivised reckless or negligent behaviour. We would support the select committee’s recommendation that this clause be amended to specify that among other conditions an IRD employee does not breach secrecy conditions if they do not intend the breach and took reasonable care in respect of the place and conditions to prevent it. But this should not preclude court action for flagrant or deliberate breaches either.A core part of this bill deals with a range of provisions to facilitate and formally recognise digital and electronic communication between the IRD and taxpayers as the department moves away from paper towards digital services. This bill also sets out a three-tiered approach to communication and changes to the language used that are proposed in this bill. Information sharing using accepted business software as a means of communication must not breach the secrecy provisions in section 81 of the Tax Administration Act. New Zealand First notes the recommendations from the Finance and Expenditure Committee that this bill be amended so that a new subsection is inserted into the Tax Administration Act to ensure that transmitting information in this way does not constitute a breach of privacy.This bill also deals with the use of taxpayer voice biometric information. The bill as written specifies that the data could be released only with the taxpayer’s consent and only for the purpose of verifying the client’s identity. New Zealand First supports the select committee’s recommendation that an additional safeguard be included whereby the Minister of Revenue should be notified when biometric information is shared.When discussing communication within the context of this bill the select committee reviewed the use of common verbs within legislation. Given the intent of this bill it is simply about how Kiwis interact with the tax department. New Zealand First shares the select committee’s concerns that the use of common verbs to signal specific methods of communication has the potential to confuse taxpayers defeating the whole purpose of simplification. We would support the select committee’s recommendations that common verbs be added to the defined terms list in every section of the Income Tax Act that contains them. Taxpayers must have absolute confidence as to what words like “notify” actually look like in reality. Vocabulary is again an issue with the potential to create an unintended consequence in section 91EE of the Tax Administration Act amended by clause 140. Replacing the word “requested” with “required” suggests that an offence could be committed if that instruction is not followed. This was not the intention of the bill as it was introduced. We would support the Finance and Expenditure Committee’s recommendation to amend the affected clauses.When addressing special tax codes the bill as introduced made several amendments. The select committee has identified legislative error regarding “no notification” tax codes. That needs to be corrected. It also identified a legislative oversight concerning special tax code certificates. New Zealand First strongly endorses making these corrections and amendments.A drafting weakness was also identified by the select committee when reviewing the legislation as it applied to automatic enrolment criteria under provisions relating to KiwiSaver. The wording of the bill as introduced appears to treat an automatic enrolment as a mistake only if there is a failure to meet all criteria. Clause 207 needs to be more specific because the bill’s original intention was that the automatic enrolment “would be treated as a ‘mistaken’ enrolment if one or more of these criteria was not met.” Other provisions in the bill relating to KiwiSaver refer to the opt-out criteria for minors who have been incorrectly enrolled before their 19th birthdays. New Zealand First agrees with the select committee that minors should be protected from being automatically enrolled. We also agree with the select committee recommendation to amend clause 210 to specify that the bill’s opt-out provisions would not apply when a person has contracted directly with a provider and they are still a minor. This change to the relevant section of the KiwiSaver Act 2006 is common sense.New Zealand First supports legislation that is robust well supported by empirical evidence fit for purpose and achieves its intended aim. New Zealand First is happy to support this legislation with the changes as recommended by the select committee. Thank you.