Robertson Grant: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Second ReadingText is incorporated into the Bound VolumeRobertson Grant: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — Second Reading[Sitting date: 31 March 2016. Volume:712;Page:10124. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): Here we are again in the House debating a piece of tax legislation and wondering what might have been—what might have been if the Government had actually said: “Here’s the opportunity. A tax bill has come up and we’re going to take the opportunity to do what the Minister said at the start of his speech which is to have a tax system that’s fair that’s simple and that’s easily understood with very few exceptions.” If only that were what we are debating tonight because once again we have a piece of legislation from the Government that goes a little way in a couple of areas to improve the situation but does not do that to the extent that I believe anyone who came to the select committee and made a submission would think was sufficient—[Interruption]The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! Sorry the member is very experienced—well not a new member anyway—and he knows that he does not stand rudely like that.GRANT ROBERTSON: As I was saying what could have been with this bill is that we could actually have gone down the path of creating that fair system and the irony of the Minister’s comments is that—as I will address in a few moments—there are in fact a large number of new exceptions being created by this. So he stands up in the House and says “We are all about having a fair system with very few exceptions.” and the bill actually creates a series of new exceptions in large part to deal with legislation that has only recently been passed by this House.What I would like to have seen in this bill was some focus around the unfairness of multinational tax avoidance. It came up in the committee’s discussions as part of the issue that I will come to in Part 2 around GST on online purchases and the unfairness that is in fact being created for New Zealand retailers. This could have been the opportunity. The Government sat on its handson this issue as it has for the last 8 years plaintively waiting for a multilateral solution which is part of the solution but completely failing to do what it could do in New Zealand to make sure that every company pays its fair share. The people who are coming home from work listening to this debate pay their fair share of taxes and the companies the small businesses and the retailers who came to our committee pay their fair share of taxes so why should the large multinationals not do the same? But that opportunity was not taken up in this bill and this speaks volumes for what the reality of the Government’s commitment is to having a fair tax system where every person pays their fair share.What we did get was in large part a discussion about the changes around the residential land withholding tax and also around the changes for GST on cross-border services and intangibles. They are the two parts of the bill that I am going to focus my comments on today. Firstly on the residential land withholding tax I do want to come back to this issue of exactly what it is that we on the committee looked at and decided to make some changes to. The first of those is around the definition of an offshore person because in the first two pieces of legislation that were part of the Government’s package to do as little as it possibly could do to manage the huge housing crisis that we have particularly in Auckland there was the creation of the brightline test. As my colleague Stuart Nash has said in respect of the brightline test Bill English brought it in. He did not know what the impact was going to be. We finally dragged it out of the officials that they think the Government will make about $5 million. They have also told us at various times in the committee that the Government has probably spent around about $2 million setting the system up—so we are about $3 million ahead at the moment.As Stuart Nash also said what we also heard in various submissions on the earlier bills was that actually what we would see is people whose change in circumstances forces them to sell a house within 2 years being affected by this bill but not a genuine property speculator just waiting for 2 years and 1 day and then selling up after that. So it was a weak Clayton’s response to this but in doing so a definition was created of what an offshore person was. This was necessary in order to be able to tell who it was who would be subject to these rules under the residential land withholding tax.The problem is that the definition of offshore person was far too broad and that was eventually acknowledged by the Government after hearing from a series of submitters. In fact just about every submitter who came to the Finance and Expenditure Committee—all of the large accounting firms small accounting firms; virtually everybody—said: “This system that you’re setting up here is going to be too complex. It’s not going to work. The compliance costs are going to be such that you’ll actually shut out some people whom we might actually want to be coming here and developing properties.”So there is a series of changes proposed by the committee around the definition of offshore person but it seems very strange to me that we are amending legislation that we passed only months ago and that really came to fruition in the question of the need for a bank account requirement for offshore persons. All manner of issues were raised with us in submissions about this around the practical difficulties of this. We talked about non-resident seasonal workers. We talked about people who had already been through the anti – money-laundering processes in New Zealand and who had already done the work that was required of this. There were already exemptions available from the requirement to have a bank account for non-resident suppliers of remote services. All of these issues were actually raised when the original legislation went through and yet here we are—we find ourselves amending that legislation only a mere matter of months later.So on that count I do agree with Jami-Lee Ross that the select committee did a good job—[Interruption] I know that is the second time in my whole parliamentary career that I have done that too—that is agree with Jami-Lee Ross. This is the second time and it is because the Finance and Expenditure Committee did actually do a good job of identifying those issues that there were with the bank account requirements and coming up with some changes to those.I do at this point want to pause and also endorse Jami-Lee Ross’ comment about the support we had from officials and also from the committee’s independent adviser Therese Turner. We are incredibly well served as a Parliament by Therese’s involvement giving us advice alongside the advice from the Inland Revenue Department and they usually manage to come together with some good advice for us. So there are changes there both around the bank account requirements for offshore persons and the definition of an offshore person.But I think what this highlights is the way that the Government has gone about addressing what is a significant issue in terms of housing in New Zealand. We have heard in the House in the last couple of days the Government attempt to minimise the issue of affordability of housing in Auckland. We had Nick Smith say that housing has never been more affordable in Auckland than it is today—a statement greeted with appropriate derision by anybody who actually lives in Auckland when you are living in a city where the house price to income ratio is now 9:1. That is out of control. We are 40000 houses short and the best that the Government can do is a tinkering around with this brightline test. It is pathetic it is hopeless it is going to bring in only about $5 million a year and we now have yet another piece of legislation amending the amendments to try to make it make sense and make it possible for those who have to administer this to do so. We support those amendments because at least we should make the pathetic policy National has put up work but it is only a tokenistic effort.I want to devote the rest of the time for my speech to Part 3 of the bill which is the amendments to provide for GST to be applied to cross-border services and intangibles supplied by offshore suppliers to New Zealand resident consumers. There is no doubt that this is a step forward. This is an issue that has been hotly debated and I think that most members of Parliament would acknowledge that retailers—particularly main street retailers—in their communities have been calling for some fairness in the system. The people who will be happy with this today are the likes of Spark—the people who compete with Netflix and others the providers of those intangible services the iTunes of the world. That is good.We are starting to provide some fairness for those suppliers—good on them—but it was not easy to listen to the submissions of people like those from Retail New Zealand who came to the committee and said: “Why won’t you extend that same fairness to us and to our members who are the people who actually get out there and sell that?”. How crazy is it that an e-book has now got this GST applied to it but the hard-copy book has not? It is the same thing—it is the same book—but GST is not being applied fairly.Hon David Cunliffe: Ridiculous.GRANT ROBERTSON: How ridiculous is that? In the end it is because the Government just could not get the hard work done. It shies away from the hard work in the taxation area when actually it should be getting in there alongside New Zealand businesses the small to medium sized enterprises that keep New Zealand going and giving them a fair go. I applaud Retail New Zealand and the other submitters who came to us with good quality submissions.When we get to the Committee of the whole House stage I will also draw attention to a couple of other submissions in this area that offered practical ways of making this happen for all forms of trading both in terms of intangibles and tangibles. We had a previous speaker Jami-Lee Ross say it was too difficult. It is not. We had submitters come to us to tell us exactly how it could be done and done efficiently and we will raise those issues in the Committee of the whole House.So we will support this bill. It is once again a series of timid steps by the National Government members when they could actually be coming to the House with legislation that does create a fair and simple tax system where everybody pays their fair share. That should be the goal of the House and I hope we will see tax bills that do that in the future.