Little Andrew: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — Second ReadingText is incorporated into the Bound VolumeLittle Andrew: Taxation (Annual Rates Employee Allowances and Remedial Matters) Bill — Second Reading[Sitting date: 27 May 2014. Volume:699;Page:18331. Text is incorporated into the Bound Volume.]ANDREW LITTLE (Labour): In conjunction with my colleague Carol Beaumont who was shifting seats at the time I was called I want to record once again that we support the Taxation (Annual Rates Employee Allowances and Remedial Matters) Billbecause it does make some important clarifications in a number of tax areas and that is good. The principles of tax law and tax administration are that the tax payable and the tax system should be as simple as possible should be accessible as possible in terms of understanding it and should be easy to administer both for workers who are taxed and for their employers or the tax collectors who are administering their tax affairs in terms of collection before imparting the tax collected to the Inland Revenue Department. So the objectives of the legislation are perfectly sensible and normal.I want to focus my comments on the employment-related aspects of the bill which cover the taxation—or non-taxation—of accommodation payments meal allowances and clothing allowances. We have had a good tradition in this country for many years of costs incurred by workers or by employers on behalf of workers so that workers can execute their duties as an employee and carry out their work normally winning some sort of tax deductibility because they are costs incurred in going about earning an income by that worker but nevertheless are costs that need to be incurred in order to do so. They are costs that should not be incurred by the worker and indeed from the employer’s point of view they have a number of business expenses but the expenses incurred—for example in providing accommodation providing a meal or providing clothing—are costs that would otherwise be a burden to the business and may in fact be an impediment to the generation of that extra employment. So there are good policy reasons as to why there have been tax deductions.I have to say that it is somewhat surprising that in this day and age this House finds itself in the position of passing legislation that is so prescriptive and so specific on these particular allowances when I think that it has been commonly understood for a long time that expenses incurred in the carrying out of a worker’s duties are typically tax deductible. When we look at the provisions in this bill in relation to accommodation expenses they make perfect sense where a worker has to travel away from their normal point of domicile to another place in order to carry out their duties. We would expect that in relation to the Christchurch rebuild just as we have seen in so many other industries over so many years. The extractive industries particularly oil and gas are classic examples where people typically do travel long distances to do their work. They will do a 2 or 3-week hitch they will finish their duties and tasks and they will then go away for 2 or 3 weeks before they resume their work. Tax deductibility encourages or promotes mobility of the workforce and flexibility of deployment particularly for those tasks and occupations that are specialist in nature and where the workforce is not easy totrain up and where it not easy to create skilled labour in a jiffy. So these sorts of allowances perform a very important task when it comes to the workforce and to mobility and flexibility.When it comes to the meal allowance provisions the bill provides that certain work-related meals will be tax deductible will not be taxable and will not be subject to fringe benefit tax. That is right and proper. That is the appropriate thing to do. Either paying a meal allowance or paying a reimbursement for a meal is not to be treated as income in the hands of the worker and therefore is payable tax-free. The legislation does not make it clear but it is possible of course that a meal eaten by a National MP at a Cabinet club could of course come under this provision. It may well be that a meal that is eaten enjoyed or sucked up by a National MP at the Northern Club the Wellesley Club or the Wellington Club falls within their duties. Let us face it—if the recent media accounts are anything to go by supping at the table of the Northern Club the Wellesley Club and the Wellington Club seems to be a regular undertaking by National MPs. That may also be tax deductible or at least members will find that a payment that is a reimbursement of that meal by Parliamentary Service or more likely the head honchos in the head office of the National Party will be able to be made tax-free. I am sure there will be National MPs who will be breathing a sigh of relief perhaps that this now very prescriptive provision will ease the burden that they are under of having to go and have all these meals and no doubt talk about great matters of policy immigration or otherwise.I think the interesting thing about all this however is that notwithstanding this provision for the tax-free nature of meal allowances and reimbursing payments for meals it runs counter to the other policy drive that this Government is making in its industrial legislation—and the honourable member David Bennett knows all about this because he is ramming it through at the moment—and that is the removal of scheduled meal breaks which have been a standard provision in employment agreements from time immemorial. There is an inconsistency in that on the one hand we have legislation that is about eliminating meal breaks altogether but on the other hand for those lucky enough to get a meal away from home they can get it reimbursed tax-free.The third aspect of the bill that I want to comment on is the payments for distinctive work clothing. Clause 23 covers off this particular area. It is a new section in the income tax legislation new section CW 17CC. The sections in the income tax legislation are now taking on the appearance of a registration number plate for a vehicle but anyway in new section CW 17CC there is a new provision providing for the tax-free provision of either allowances or clothing that is distinctive in nature. Presumably a high-visibility vest would be a distinctive item of clothing for those working in hazardous industries. It is just as well that the provision of a high-visibility vest would be tax-free and will not incur any tax burden because of course the health and safety legislation that this Government is passing requires—in a mandatory provision—employers to provide such clothing. So there at least is some consistency. Compare that with the meal allowance provision where this Government is busily abolishing meal breaks. At least in relation to the clothing provisions of this bill there is some consistency.The other thing that this bill does of course—at least in the form that it has come back to the House in from the Finance and Expenditure Committee—is that the insidious attempt to remove the allowance that plain-clothes police officers have traditionally had the benefit of has now at least been removed from the bill. Police officers—at least those carrying out plain-clothes work—can breathe easy at night knowing that they will continue to be supported in their very difficult and stressful roles and that they will not incur an extra burden just because they happen to getreimbursed or receive an extra allowance to provide for clothes outside the uniform that they would otherwise be provided. I make those interesting observations. It is good to have legislation that tidies these things up. Tax legislation should be simple. It should make our tax law accessible sensible and consistent. Ideally it would be consistent with other Government policy—and in this case there is at least one allowance that is not—but notwithstanding that we will support the bill.