Cullen Michael: Taxation (Annual Rates Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Bill — In Committee 
Cullen Michael: Taxation (Annual Rates Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Bill — In Committee 
[Volume:607;Page:4223] 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 There was a lot of sort of hatred and almost self-loathing coming through that speech. Let us just deal with a few facts. Firstly of course companies are not taxed at 19.5 percent. The select committee changed that rate to 33 percent for wholly owned companies. Various parties in this House have suggested that they would pop up and move an amendment to lower the rate back to 19.5 percent but nobody has actually done so I notice. Mr Morgan will remain unsatisfied on that point because he could not find any stooge in the House to pick it up and move the amendment for him. 
Secondly in respect of the so-called separate tax regime there has been a separate tax regime for Maori authorities since 1939 in this country—long before the term “politically correct” was even thought of. Indeed it was not long after the National Party was thought of which is one of the worst mistakes we ever made in New Zealand politics. There have been separate tax regimes since 1939. For most of the last 10 years or more Maori authorities have been overtaxed compared with the rest of New Zealand income-producing assets and organisations. Most Maori authorities have ended up being double taxed due to the absence of an imputation system and with two 25 percent rates. [ 
Interruption 
] There is a difference and the difference is very simple. The difference is that people cannot leave Maori authorities. If one is a beneficiary one’s assets are locked into a Maori authority and one cannot exit from it. It is not like holding shares in a company. It is not like being a member of those wonderful family trusts that National Party members all set up as a means of tax avoidance. That is what they exist for. [ 
Interruption 
] I bet Dr Lockwood Smith does not have a family trust he can set up because it is not permitted to have one for one person. 
Rodney Hide 
: I raise a point of order Mr Chairperson. The Minister has accused National Party MPs of setting up trusts to commit a criminal act—tax avoidance—and I suggest that you put him right into order. 
Hon Dr MICHAEL CULLEN 
: Speaking to the point of order Mr Chairperson I want to say that tax avoidance is not a criminal act. Tax evasion is a criminal act. 
The CHAIRPERSON (H V Ross Robertson) 
: I thank the honourable member. It is a debatable point. 
Hon Dr MICHAEL CULLEN 
: So we have organisations whose members are locked in. Many of those members by the very nature of Maori authorities are very small shareholders because Maori authorities have thousands and thousands of members. If those authorities were taxed at 33 percent the taxpayer would have to fund a very large amount of administration to deal with thousands upon thousands of rebates of $10 $15 or $20 a year. So stupid are Dr Lockwood Smith and Mr Connell that they would actually like to pay more taxes to fund the Inland Revenue Department to have hundreds of extra officials so that we can deal with tens of thousands of rebates of $10 or $20. They call that being non-politically correct. I call that being utterly stupid which is why the Inland Revenue Department and Treasury were the source of the suggestions about the changes to the taxation of Maori authorities. 
This is indeed designed as an issue both of equity and of tax simplification. The select committee decided that in terms of equity it was fairer to tax wholly owned companies at 33 percent where they would be competing with other companies being taxed at 33 percent. But Maori authorities are unique. It is true that no other country in the world has a separate tax regime for Maori authorities. There is a reason for that: this is the only country in the world that has Maori authorities.