Webb DuncanDr DUNCAN WEBB (Labour—Christchurch Central): Thank you Madam Deputy Speaker. It's with a real sense of sadness that I hear the same old story again that we need to leave money in the pockets of New Zealanders and let's lower the tax rates.Brett Hudson: Well it's their own money Dr Webb. It is their own money.Dr DUNCAN WEBB: You may say that but it's about fiddling around the edges—DEPUTY SPEAKER: I didn't say that.Dr DUNCAN WEBB: —and I'm glad that we are part of a Government that's looking at the equity of the whole tax system and not looking at just giving a bit more money to the same old few. We need to look at the system as a whole and this bill is part of doing that. We're looking forward though to a much broader examination of it and I'm looking forward to that—a real adjustment real equity in our tax system.I'll tell you one thing that I think's really good about this and that's secondary tax because true hard-working New Zealanders have been suffering under secondary tax for some time. It's those people who are working often on very low wages with two or sometimes three jobs who have been working across these jobs and who in their second and third job are paying an increased tax rate. They're paying it and they're not getting it back until the end of the year when they put their return in. Now you know what? A lot of these people—people who might be doing cleaning jobs or working in a factory and then as a security guard after—they can't afford to bank that money and wait till the end of the year. They desperately need it. So making our tax system administratively fair for those people is really really important and the ability to have more nuanced tax codes that are more responsive so that people get to keep as much of their money as they can is a really really good thing.Of course one of the things that this means is that there won't be a tax refund industry—an industry which really preys on the apparent complexity of the system a system which in fact is not as complex as it's made out to be. But those tax intermediaries those industries out there who take 30 or 40 percent of a tax refund really for filling out a very simple form—well that industry will shrink significantly. They won't need that large tax refund; they'll pay only the right amount of tax. That's a very very good thing and I know that a lot of really hard-working New Zealanders in several low-paid jobs are really looking forward to and appreciate that initiative.Of course the other thing that's going on there is the automatic filing of these returns. Can I just say that the Business Transformation project is a great project a project which is streamlining information and making the tax system administratively much more simple. But one of the things that it does do and is picked up in this bill is it automatically calculates tax liability which means it may require adjustment further down the track. And one of the questions that is addressed here is whether when we come to correct that interest or penalties should be payable. In the select committee I consider it a significant improvement—and I must say officials were quizzed at length on penalties and interest and how just they are and we got to the conclusion that if there's automatic filing going on if the return is essentially generated within the IRD then it's not appropriate to be imposing penalties if it needs later adjustment. So penalties and interest aren't appropriate there but it was a good discussion and one where we really moved forward.Of course the other important thing for small business—small and I must say medium sized business as well—is the binding ruling process. Now the fact of the matter is that no matter how hard we try to make our tax system simple to make it fair and simple at the same time is a challenge and where we get into complex financial transactions and complex business arrangements we don't always know exactly how the tax system interfaces with what's going on and business people need certainty. So the binding ruling process is a great idea but it was expensive and long. So the introduction of a short-form process is a great innovation here but it's not just for genuinely small businesses. Businesses with a turnover of $5 million—it's easy to think of a business that might have only five or 10 employees. We wanted to push that out so that for businesses that are significantly larger than that—I can think of professional services firms with 100 employees who turn over around $20 million—a binding ruling process for them is a great innovation.So that's another innovation here where taxpayers can go to the IRD in an expedited process and find out their tax position without having to engage in any conflict process. It's not litigation. It's very much determining what the best tax position is and it's binding—that is to say even if a later decision of the court determines that it wasn't appropriate it's binding as regards the parties to it and those that relied on it. So that again is a very good process. The other good thing of course and it's another administrative simplification is the write-off rule because quite often there's a lot of small tax bills floating around and really the cost of administering them the costs of putting in returns exceed the benefits from it. Whilst the IRD accepted this it had a relatively complex process a relatively complex set of rules. And again always for simplicity the Finance and Expenditure Committee looked at those issues and said No no we don't want a whole lot of rules. Let's have a pretty brightline approach—50 bucks. If it's a tax bill of 50 bucks or less we'll write it off." And that's going to affect thousands upon thousands of New Zealanders who won't need to go and file a return. Their tax is not worth collecting and it's a very good write-off rule. So another win for hard-working New Zealanders out there who won't have to engage. I just have to say though we do need to keep our eye on the fact that our tax system remains one that is based on taxpayer honesty and taxpayer compliance. Whilst a whole lot's going on inside IRD and a whole lot of automatic filing's going on it is up to the taxpayer the onus remains on the taxpayer to ensure that their tax position is correct and the integrity of the tax system relies on the integrity of New Zealanders who are fair decent people know that it's appropriate to pay their tax and do so in full and on time. These systems are really supportive of that but they don't replace it.Of course with KiwiSaver we've heard already the fantastic improvements to that and I really didn't understand the suggestions that these in some way were anything other than outstanding innovations. The additional amounts that can be contributed—6 and 10 percent—just more options. Let's give New Zealanders some choice—Brett Hudson: What's there to encourage the 1.2 million to start contributing? Come on. Hon Kris Faafoi: Well they just had $1000 that you took away.Dr DUNCAN WEBB: Yeah—and of course the five-year lock-in period; we've done away with that—more flexibility.Hon Kris Faafoi: Where's the kick-start?CHAIRPERSON (Hon Anne Tolley): It's very difficult for the speaker when members on their own side are yelling as well as the Opposition.Dr DUNCAN WEBB: But Mr Faafoi's contribution was excellent I must say.CHAIRPERSON (Hon Anne Tolley): Well he doesn't have the floor.Hon Carmel Sepuloni: He doesn't need it!Dr DUNCAN WEBB: Ha ha! To move finally to something which I thought was important and another one which really showed the rigour that a select committee—and I must say the Regulations Review Committee—can bring to these proceedings is the care and management rules. It was proposed that the commissioner have an ability to essentially suspend the operation of parts of the law where there were obvious drafting errors and the purpose of the Act wasn't achieved. Those powers were stated broadly and the Regulations Review Committee which I am lucky enough to sit on pointed this out to the Finance and Expenditure Committee which I'm also lucky enough to sit on.So we took cognisance of that looked at it and suggested that further scrutiny of that was required because of course it's an extraordinary power for a member of the Public Service to be able to essentially suspend the operation of the Tax Administration Act which is what was happening here. Now whilst we accept that legislation can grind relatively slowly through Parliament we wanted real scrutiny of any legislation which conferred that kind of power not on Parliament not on the executive but on a member of the Public Service.So that section of the legislation that care and management section was taken out of the legislation and it is coming back before the committee in another guise in another tax Act to have a closer look at and I look forward to seeing that because it's an indication of the real scrutiny and I think the real quality improvements that can be achieved in this kind of legislation. But overall this is a bill that really does help New Zealanders and it helps New Zealanders especially those hard-working New Zealanders on lower incomes in respect of secondary tax. A fantastic addition to our tax law. Well done Minister. I commend this bill to the House."