Nash Stuart: Taxation (Transformation: First Phase Simplification and Other Measures) Bill — Second ReadingText is incorporated into the Bound VolumeNash Stuart: Taxation (Transformation: First Phase Simplification and Other Measures) Bill — Second Reading[Sitting date: 12 April 2016. Volume:713;Page:10425. Text is incorporated into the Bound Volume.]STUART NASH (Labour—Napier): The last member who spoke on the Taxation (Transformation: First Phase Simplification and Other Measures) Bill Alastair Scott asked some very interesting questions and I have some answers for him. His first question was how we are going to fund what we want to do—keeping in mind that the universal benefit is something that we have discounted. But let me give the member one idea. This is transformative. It may be quite hard for the member to get his head around but how about this one: everyone pays their fair share of tax. How about that? Pay your fair share—imagine that.We have the New Zealand Herald journalist—I am not dismissing the journalist. Matt Nippert is a very good journalist but he is a journalist. He is not a member of the Inland Revenue Department (IRD) and not a tax expert but a journalist who has uncovered tax rorts to the tune of about $500 million. This is just the top 20 companies—uncovered by a journalist. But wait there is more. Down the other end of the scale the real experts say that we could be missing out on $7.1 billion a year for our tax base due to these large multinationals avoiding and evading tax. That is a transformative idea: everyone pays their fair share.The good thing about the New Zealand tax system is that we do not want people to pay more than their fair share. We are not asking them to hand over all of their profits; all we are asking them to do is pay their fair share and if it is company tax it is only 28 percent. It is not a whole lot of money. They are still left with a whole lot of money in their back pocket that they can repatriate back to the States. But the interesting thing is that National’s Minister of Revenue has come out and said there is no problem here—we have not got a problem in New Zealand.The amazing thing about this is that the Obama Administration tax officials who know a little bit about tax—“Trust me I am from the IRS.”—say there is a big problem. In fact President Obama himself called these companies traitors. David Cameron has come out and said: “We are going to change the law because this is wrong.” Even the New Zealand Prime Minister has come out and said: “This is morally wrong.” But the revenue Minister has said: “There’s no problem. Don’t worry about it. Nothing to see here.” Well I do not know what planet the revenue Minister is on when we are $7.1 billion down on what we should be because companies are engaged in aggressive tax planning that sees them transfer all their profits offshore and not pay any tax in New Zealand. Mr Scott I think everyone paying their fair share is pretty transformative. I think it is a pretty good idea too.The thing that gets to me is when National Ministers and National members stand up and defend these large multinationals at the expense of hard-working middle New Zealanders who actually pay their tax. You know something is wrong. You know they are a little bit out of touch. I would guess but I am not going to put my house on it that if I went into Mr Scott’s electorate and I walked down the main street of Masterton and I asked these middle New Zealand families “Did you pay your tax?” they would say: “Absolutely.” In fact they would be affronted at any suggestion that they did not pay their tax. If I said to them “Do you think it’s right that these large multinationals are paying no tax?” I guarantee 95 percent of people whom I interviewed on the main street of Masterton would say that it is about fairness. What I argue is that what the multinationals are doing at this point in time to the New Zealand tax base simply is not fair.Yes Mr Woodhouse we do have a problem. It is recognised by every single OECD country that we have a problem. Where the difficulty lies is in the solution. But what we think we must do is at least quantify the problem. At least get a panel of experts in. Not just one—Mr Shewan—but let us get a panel of experts in to understand the extent of the problem. Then we will know how much we should be investing in this. I can vouch that the IRD has a number of incredibly capable people in its ranks. It has some of the finest tax experts I believe in the world. In fact I know that the IRD is co-opting some of its staff to help the OECD.I will tell you what I know about the IRD officials who appear in front of our Finance and Expenditure Committee. They are passionate about what they do but they are also passionate about New Zealand. They also understand that the integrity of the tax system is fundamental to a sound economy. I believe that if the Minister said to his officials in a public way “We have a problem here.” they would say: “Yes Minister. We know that. We’ve been telling you this for a while.” If he said to them “Can you go away and quantify the value or the extent of the problem we have here?” they would take to it to like—I was going to say “a robber’s dog” but that is probably not the right description for the IRD. But what I am saying is that everyone recognises this is a problem except the revenue Minister.Then within about 2 weeks we have this overseas trust issue. I believe that a country’s brand—in fact any brand—is based around how people perceive that brand. Mr Key and Mr Woodhouse may say “It’s not a tax haven. We’re not operating any sort of tax schemes.” but the international press come out and say that if it smells like a rat if it looks like a rat and if it tastes like a rat then it probably is a rat. I think that the way the Prime Minister should have handled this—if he did not know already and there is a suggestion that he had been warned because articles were published in the National Business Review detailing exactly how this worked—is that the Prime Minister should have come out and said: “Wow we did not understand the extent of this problem. I am going to work day and night to close this down because for me the integrity of our country the integrity of our brand and the integrity of our tax system is paramount.”But instead what the Prime Minister did was try to defend multinational organisations and those who are attempting to avoid tax. The thing about that is the vast majority of New Zealanders—middle New Zealand—pay their tax. In fact if any part of middle New Zealand works to avoid their tax the IRD comes down on those people like a ton of bricks yet when a multinational organisation avoids—I am not saying evades; I am saying avoids paying its tax or when overseas dictators or arms’ dealers or oligarchs or whoever because we do not know seek to avoid paying tax the Prime Minister defends them.My personal view is that the Prime Minister has lost touch with what middle New Zealand cares about. Middle New Zealand cares about fairness.The interesting thing—I have got four children—is that almost the first concept that children learn is fairness. Those of you with children will know where I am coming from. When my little son is aggrieved by his sister he comes up and says: “Dad this isn’t fair. It’s just not fair.” Fairness is the first concept that children learn. I think it is what makes New Zealand such an egalitarian society or it used to be. It is because we value fairness.We expect everyone to do their fair share and pay their fair share. When the Prime Minister and his Ministers stand up and put the interests of multinational companies and overseas oligarchs before the interests of middle New Zealand then I think we have a problem. I think we have a Government that has turned arrogant and I think we have a Prime Minister who has lost touch with what New Zealanders really value and that—Mr DEPUTY SPEAKER: Anyway back to the bill.STUART NASH: —is fairness. Thank you very much.