Nash StuartSTUART NASH (Labour—Napier): Of course that member loves this tax system because he makes a whole lot of money out of capital gains and he does not pay a cent. If you are making a lot of money out of capital gains you love the system because you are not part of it. You are not part of it if you are making money out of capital gains.The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!STUART NASH: That is why that member loves our tax system.The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!STUART NASH: Sorry Mr Assistant Speaker.The ASSISTANT SPEAKER (Hon Trevor Mallard): That is right. I think you should address me but not talk about me.STUART NASH: Oh sorry. I did not mean to talk about you Mr Assistant Speaker; I meant to talk about that member over there.The ASSISTANT SPEAKER (Hon Trevor Mallard): I accept the member did not know what he was doing.STUART NASH: Anyway it was quite a naive speech but not in a bad way because the member is not a bad person; he is just naive. To say that we have one of the best tax systems in the world just bears no relation to reality. It is quite sad actually.This was a wide-ranging debate. In the Committee stage it went for a number of hours. We talked about a whole lot of different measures: some good some interesting and some a little quizzical. For example section 306(2) of this bill wait for it comes into force on 1 October 1986." Todd Barclay was not even born then and I guess he was not even born now. I can inform the House that if between now and 1986 the "transfer of ownership of the asset would be a financial service the subsection deems the person to make a supply of the asset by a transfer of ownership."So in 1991 if you got away with not providing transfer of ownership papers or a contract you are about to be caught out. You were waiting for this day were you not; not you Mr Assistant Speaker—people who thought they had got away with this. Well we caught up with them in 2017. This is what this Government has been doing. From 1986 to 2017—what has it been doing? We never asked this Government to slow down. We have never said to the Government: "Stop implementing things that are important to the people of New Zealand." What we have said is at least come up with a policy framework not throw a whole lot of bills at the Committee where it is Arthur one day and Martha the next and no one knows what the hell is going on—none more so than the people who have to submit. These are the experts. These are the nation's experts who have said to the Government: "Hold fire. We haven't got time for this whole lot of stuff we're supposed to be submitting on."The thing about tax legislation is that it has got to go through a very robust process if it is going to be good legislation and if there are not going to be loopholes that you can drive a bus through. This is the criticism—not that the Government has been going too fast but the fact that it has left it to 2 minutes to midnight.There is some good stuff in here. We are supporting the bill—there is no doubt about that. The closely held company changes will drive efficiency and we support that. But this structure this legal company structure has been around for a long long time. There has been plenty of time for the Government to have actually put in place a measured framework to get the efficiency through a hell of a lot sooner than after 8½ years in office. It is a tired Government that really has not done much until now and it is too late. But it is also muddled and the experts are saying there is no policy direction there is no framework—that is why they are getting frustrated Mr Bayly.One of the things that this bill does is it separates out the cost of maintaining aircraft engines—fantastic. Well if you are in the business of aircraft engines that is really good. But there are some fundamental problems with our tax system like the fact that the IRD owes Kiwis $700 million and it is not giving it back unless you proactively go towards it. Yet if you owe it money if anyone owes it money then by God it comes after you with a huge big stick which is not a bad thing because another thing that happened in this bill is that the Committee changed the GST rules. So when I mentioned the fact that the IRD owes Kiwis about $700 million what happens with that money is that after 4 years if it has not been claimed it falls off a cliff—so it is no longer yours. The IRD does not give it back. It would probably account for it so if it rolls over—let us make an assumption that there is about $200 million or $175 million a year that just does not get paid back to Kiwis. The IRD is pretty quiet about it not in a dishonest way but just in a "You know let's not give it back. Here's $175 million we can use ourselves."But if you owe the IRD money then it will chase you to the ends of the earth. There is a good provision in this: if it has been deemed that there has been an honest mistake around the overpayment of GST instead of having to wait only 4 years they have actually extended it. What the IRD is saying—what this bill says—is that we will now allow you to have not only that 4-year window but another 4-year window if it has been proven it is a genuine mistake. That is not a bad thing.But what I would have loved to see this bill say is it is not just for companies and GST but for individuals because a lot of the time the people who are actually overpaying tax are those who can least afford to overpay tax and it is usually people paying secondary tax. How secondary tax works is a person has one job—let us say they earn $30000—and they pay the tax rates for $0 to $30000. Then what they do is they go home they change and they go to another job. Let us say they earn $35000 in that so they pay the tax rates for $1 to $35000. That is what happened in the past. What happened then was that at the end of the year they had to pay tax on $65000 and they ended up with a big tax bill.So we brought in secondary tax and to be fair it is not a bad regime because it meant that those who could least afford it were not presented with a big bill at the end of the year. But what it did mean was that these people often overpaid tax. There was a classic case of a very good friend of mine who runs a company. They had a woman working for them 20 hours a week and they convinced her to phone one of those tax refund lines. She did not want to—she was a little bit scared to be honest of interacting with the IRD—but in the end she did. It took her literally 10 minutes. They had her IRD number she put it in and she ended up with a refund of I think about $450. This was actually quite coincidentally at a time when one of her children was starting school and there were the expenses of the uniform etc.—$450 was fantastic.But my point is that it would actually be really good if that $450 did not come as a lump sum 3 years after she had actually overpaid it but if it had been in her back pocket the day she earned it. It is like this: if that person had not phoned the IRD and got their $450 back after 4 years it would have disappeared.We have said that if you have overpaid your GST there is a provision here—we will look at this. Good. But it needs to go further because there are a hell of a lot of Kiwis who actually just need to be prompted a little bit to check their IRD numbers; either phone the IRD—that is easier actually: go on to the website and check it on the IRD site; it is pretty easy to do—or if that is a little scary interacting with the IRD then at least go to one of these tax refund companies and you could end up with a lot of money back. So that is another good thing in this bill.Michael Wood talked about accelerated depreciation for damage in the Kaikōura and greater Wellington earthquake—that is a good thing. By and large we are not saying that these bills are not good legislation and we are not saying that they are not necessary legislation because the vast majority of the time they are. I sort of question the wisdom of having a clause in the bill that comes in 30 years previous but you know that is the way it is. What I am saying is that my criticism over the last year—because we have been speaking on a lot of tax legislation over the last year—has been that it has done some good stuff but it is just too late.This is the Government that says "We are the party of business." and yet by and large—and Mr Bayly knows this—it has taken it 7 years to put tax legislation in place that actually would have helped business. If this had come in 4 years ago then the regime would be well bedded in efficiency would have been driven through the IRD people with look-through companies or aircraft engines or GST etc. etc. would have got the benefit of this. But to just leave it until after 8 years in Government is I think too long. To be honest it sort of treats the taxpayer with a lack of respect—which I think is unnecessary—and I am not too sure why. Anyone who is a constituent MP and even a lot of the list MPs—you know we get hit up about this stuff quite a lot.So just to sum up we are supporting this legislation the Taxation (Annual Rates for 2016-17 Closely Held Companies and Remedial Matters) Bill. There is a lot in this tax bill and there is a lot for the tax experts and business owners to digest. But my worry is that before they even get an opportunity to get halfway through it we are going to have another piece of tax legislation that is going to have a similar impact or is going to amend tax legislation or the Tax Administration Act or the Companies Act even more. The burden on the people who are required to implement this is becoming too much and that is the feedback we are getting from the industry itself. That is the feedback we are getting from the industry. So we support this of course but with reservations. Thank you very much."