Little Andrew: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeLittle Andrew: Oral Questions — Questions to Ministers[Sitting date: 30 March 2016. Volume:712;Page:10003. Text is incorporated into the Bound Volume.]1.ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Does he stand by his statement with regard to multinational corporations that “I suspect they are legally paying their correct amount of tax; the question is are they ethically paying the right amount of tax. It feels hard to believe that they are”?Hon BILL ENGLISH (Acting Prime Minister):Yes it is unfair that some multinational companies appear to be able to structure themselves so that they avoid paying tax anywhere in the world or so that they pay minimal amounts of tax. The only lasting solution to this problem is collective global action. The good news is that the OECD is leading work on base erosion and profit shifting and New Zealand is an active participant in that work.Andrew Little: Do all multinational companies in New Zealand comply with the OECD guidelines on multinational enterprises which state that “enterprises should comply with both the letter and the spirit of the tax laws and regulations of the countries in which they operate.”?Hon BILL ENGLISH: They are certainly required to comply with New Zealand law. We need to bear in mind that New Zealand has the ability to tax the profits of these companies in New Zealand—that is revenue minus expenses. If profit is generated elsewhere we do not have the ability to tax it in other jurisdictions.Andrew Little: How many multinationals has his Government taken tothe OECD dispute resolution process?Hon BILL ENGLISH: I do not have that information and I am not sure exactly what process the member is referring to. The New Zealand model for taxing these companies is about as robust as that of any developed country—that is we have tighter rules on transfer pricing and thin capitalisation regimes. If they make profits here they are taxed.Andrew Little: Does he believe that the Australian-owned banks in New Zealand—[Interruption]Mr SPEAKER: Order! I ask the member to start that question again.Andrew Little: Does he believe that the Australian-owned banks in New Zealand which are the most profitable banks in the developed world are paying the tax they owe or are Kiwis having to carry the burden for them as well?Hon BILL ENGLISH: I believe that they are paying the tax they owe. In fact 4 or 5 years ago Crown Law won major tax cases where we collected hundreds of millions more out of the banks—Hon Trevor Mallard: That Michael Cullen funded.Hon BILL ENGLISH: —that is right; he did too—and since then the rules have been further tightened in ways that the banks do not like but it means that they do pay pretty close to the statutory rate of tax.David Seymour: Is the Prime Minister aware that our company tax rate of 28 percent gives New Zealand one of the highest effective tax rates on capital in the OECD and that a more effective way of gaining more revenue might be to have a more competitive company tax rate? [Interruption]Mr SPEAKER: Unless the noise settles down particularly from my left-hand far quadrant I will be asking members to leave and that includes Mr Cunliffe. When I get to my feet—[Interruption] Order! [Interruption] Order!Hon BILL ENGLISH: Yes by international standards we have a robust company taxation system. New Zealand has always believed in a broad based - low rate system but that means having a company tax rate close to the higher levels of our personal tax rates. That is a bit unusual.Andrew Little: What conversations has he had with the member for Epsom in relation to tax collection and the need to pay for superannuation a topic that I know is very dear to the heart of the member for Epsom?Hon BILL ENGLISH: None.Andrew Little: Is it acceptable that his Government is penny-pinching to the extent that the health Minister now says of Pharmac that it has not got the money at the moment to buy life-saving medicines like Keytruda while at the same time multinationals are ripping us off for anything from $500 million to $7.3 billion a year which is what the Tax Justice Network says New Zealanders are being ripped off by?Hon BILL ENGLISH: I simply disagree with and rebut the assertion the member is implying that the Government is soft on the taxation of companies. It is simply not the case. We have one of the most robust taxation systems for company profits in the developed world. The type of issues the Tax Justice Network is pointing to can be dealt with only by global cooperation to ensure that multinationals pay their tax somewhere. But for instance if Fonterra sells a billion dollars’ worth of product in China we do not want the Chinese Government levying 30 percent tax on them and nor should it be able to.Andrew Little: Will the Government join with the Labour Party and support a parliamentary inquiry into multinational tax avoidance and stronger laws and more money for enforcement; if not why not?Hon BILL ENGLISH: The Parliament has a regular opportunity every time it looks at a taxation amendment bill—there are two or three a year generally—and if you look back through the record of what the New Zealand Parliament had done you will see that the Finance and Expenditure Committee has supported as far as I know every single measure that the Government has taken to ensure that multinational companies pay tax on their profits in New Zealand.Chris Hipkins: I raise a point of order Mr Speaker. I waited until the end of that question exchange because I did not want to interrupt the flow of the questioning but while you were on your feet earlier on chastising a member to your left for interrupting while you were on your feet a member on your right did exactly that to which you I think indicated some appreciation by laughing. I just want to get some reassurance from you that members on the left and the right will be equally chastised when they engage in that kind of behaviour.Mr SPEAKER: I certainly did not appreciate the interjection that was thrown. It should not have happened. At the time I was on my feet dealing with another matter and there was a very large bulk of interjection coming. There was a quip that some people found amusing. It was unhelpful and should not have occurred particularly whilst I was on my feet.