WEBVTT - Bonus bite: Is our tax system fair? Labour's Barbara Edmonds

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<v Speaker 1>You're listening to a share these podcast.

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<v Speaker 2>I'm sure you don't want to announce any policy here today.

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<v Speaker 2>Maybe you can let us in on what kind of

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<v Speaker 2>process you might go through when you are determining your

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<v Speaker 2>tax policy.

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<v Speaker 1>So the question I always ask, and it's a fairness question,

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<v Speaker 1>is that why should a salary and wage earner be

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<v Speaker 1>taxed for every dollar that they earn, but someone that

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<v Speaker 1>can dispose of their third fourth residential property or rental

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<v Speaker 1>property gets that profit tax free. There is a fairness

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<v Speaker 1>in there. Also. The element when it comes to tax

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<v Speaker 1>is we work in a tax system here in New

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<v Speaker 1>Zealand that is based off the framework of broad base,

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<v Speaker 1>low rate. You tax a whole bunch of things, a

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<v Speaker 1>whole lot of things at the base broad you make

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<v Speaker 1>it broad so that you can keep the rate of

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<v Speaker 1>tax low, so low rate, it's quite clear in New

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<v Speaker 1>Zealand that there are elements missing from that broad base.

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<v Speaker 1>And it's no secret that we are one of three

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<v Speaker 1>OSCD countries that doesn't have a capital gains tax. And

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<v Speaker 1>there's also no secret that actually only six jurisdictions in

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<v Speaker 1>the world have a wealth tax. And actually the conversation

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<v Speaker 1>around a wealth tax is starting to flare up a

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<v Speaker 1>lot more in other jurisdictions such as the UK for example.

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<v Speaker 1>We have to take all of that in our stride

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<v Speaker 1>as we develop our tax policy. Having a tax lawyer

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<v Speaker 1>that's in there helps with the policy decision making element

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<v Speaker 1>because I can say, if you tax this, this is

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<v Speaker 1>what the outcome is. These are the deductions that a

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<v Speaker 1>business or a person will should be applicable for, etc.

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<v Speaker 1>But ultimately we have to think about that in a

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<v Speaker 1>political sphere as well, because we want to win the

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<v Speaker 1>election and we know the tax system is unbalanced. We

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<v Speaker 1>know that there is unfairness for some people. So we

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<v Speaker 1>need to come to the country with a policy that

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<v Speaker 1>meets those objectives, but also one that we're not going

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<v Speaker 1>to scare everybody. Can reassure everybody that this is how

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<v Speaker 1>it's going to impact you. If I can't explain that

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<v Speaker 1>as a tax lawyer, then that's not great.

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<v Speaker 2>Do you think that there's a path there that that

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<v Speaker 2>can be impactful and popular?

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<v Speaker 1>I think so. I mean, and ultimately, the thing I

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<v Speaker 1>really give credit for to New Zealanders over the last

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<v Speaker 1>year since being the finance spokesperson and in particular the

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<v Speaker 1>business community, is they can see where the inequity lies

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<v Speaker 1>in some places. And there also if you'll see a

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<v Speaker 1>few quite senior business leaders have come out saying well

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<v Speaker 1>we need some changes in this space, or we should

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<v Speaker 1>have a capital gains tax, or this is why we

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<v Speaker 1>don't think a wealth tax might work, or or what

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<v Speaker 1>about land tax or something else tax. But again you

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<v Speaker 1>need to for me, as the finance spokesperson, I need

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<v Speaker 1>to look at it all as a package. What's the

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<v Speaker 1>society that we want to live in, the priorities, in

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<v Speaker 1>the basics, which person in New Zealand should be expected

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<v Speaker 1>to have, and then how we pay for it. And

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<v Speaker 1>that requires the using of the government balance sheet to

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<v Speaker 1>its full purpose, not just sort of superficial discussions around

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<v Speaker 1>you know, tax and spend debt, you know overspending or underspending.

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<v Speaker 1>All of that. We need to I take a very

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<v Speaker 1>considered look when I look at this together.

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<v Speaker 2>You know, we run an employee share program. It also

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<v Speaker 2>helped many other businesses run employee share schemes. So that's

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<v Speaker 2>where your team get a portion of shares as part

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<v Speaker 2>of their remuneration package. And it's a great way to

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<v Speaker 2>kind of share the ups or the potential gains of

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<v Speaker 2>what's going on for the hard work that people are

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<v Speaker 2>putting in. Is anything on your mind around how we

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<v Speaker 2>might look at the tax around those employee share schemes

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<v Speaker 2>for people.

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<v Speaker 1>So I've been around during two forms of changes quite

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<v Speaker 1>recent changes to employee share schemes. Is back when National

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<v Speaker 1>had put through some changes because there were integrity risks,

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<v Speaker 1>and then more recently when Labor had tightened it. So

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<v Speaker 1>I was in the Finance Expenditure Select Committee at time

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<v Speaker 1>those changes that kind of happened in twenty twenty two.

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<v Speaker 1>I have had some feedback from different businesses that they

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<v Speaker 1>do want to be able to get more employee share

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<v Speaker 1>schemes up and running, but sometimes the tax, the tax

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<v Speaker 1>element in the way that it was changed, is a

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<v Speaker 1>concern for them. So I'm more than happy to listen

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<v Speaker 1>to what people think should be changed. There is always,

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<v Speaker 1>like when I was working for the National government, that

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<v Speaker 1>integrity risk. But the other element, which I think we

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<v Speaker 1>also need to be mindful of is that there have

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<v Speaker 1>been employees share schemes that have worked overseas off shore,

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<v Speaker 1>but where the executives did really well, but you know,

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<v Speaker 1>for some reason the company whatever liquidated or it closed down,

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<v Speaker 1>where the executives did really well, but the everyday worker

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<v Speaker 1>didn't do well, So we want to be able to

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<v Speaker 1>protect some of those rights well. But I am open

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<v Speaker 1>and I think that it definitely has a place employee

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<v Speaker 1>share schemes because I think, as a worker, how cool

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<v Speaker 1>is that that you own part of this business that

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<v Speaker 1>you're working in and that actually there are productivity gains

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<v Speaker 1>from having those incentives that you want to do your

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<v Speaker 1>best job because you know that this is going to

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<v Speaker 1>return back to you through a return through your shares.

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<v Speaker 1>So definitely open to it. The tax stuff is always

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<v Speaker 1>complicated because integrity risks, et cetera. But open to hearing

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<v Speaker 1>solutions from those that practically work through it about some

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<v Speaker 1>of the challenges for them. Some of the integrity risks

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<v Speaker 1>that was brought up during my time when I worked

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<v Speaker 1>under a national government is that some particularly and sort

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<v Speaker 1>of more newer businesses, they were using it as a

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<v Speaker 1>form to be income without it being taxed. So that

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<v Speaker 1>was why the rules changed around twenty fifteen sixteen, so

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<v Speaker 1>there was a big discussion document on it. So it's

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<v Speaker 1>an element of where the integrity is that you're basically

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<v Speaker 1>using the share scheme to be a form of income

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<v Speaker 1>without it returning is income and therefore being taxable. But

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<v Speaker 1>I think some of that's changed. So I think some

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<v Speaker 1>of the rules that have been that have happened since

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<v Speaker 1>that those earlier days have tightened that integrity risk. It's

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<v Speaker 1>a question those where's the balance. Have we tightened the

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<v Speaker 1>screws too much on the integrity side and therefore we're

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<v Speaker 1>sort of mulling the productivity elements of what employee share

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<v Speaker 1>schemes are and I'm not quite sure. I'm still a

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<v Speaker 1>little bit out there as to where that balance is,

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<v Speaker 1>but really keen to hear from others around where there

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<v Speaker 1>should be some changes, because actually it's not about integrity,

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<v Speaker 1>it's actually about the productivity gain for the employees.

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