Simon Watts: Revenue Minister admits Donald Trump was a factor in scrapping Digital Services Tax Bill

The Revenue Minister says Donald Trump was a factor in scrapping the incoming Digital Services Tax Bill.
 
A legacy of the last Government, it would've imposed a three percent tax on revenue from Kiwis - earned by the likes of Facebook and Google.

The US President has called such legislation 'overseas extortion', and said he'd act against it.

Simon Watts says they considered recent developments, including in the US.

"But at the end of the day - I took a look at this tax, we've been looking at it a bit and it's got some real drawback - and we've made the decision to pull it from the agenda."

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Episode Transcript

Speaker 1 (00:03):
Questions, answers, Thanks analysis, the drive show you trust for
the full picture. Heather Duplessy and drive with one New
Zealand let's get connected news talks that'd be.

Speaker 2 (00:17):
Hey, good afternoon. The government has ditched the Digital Services
Tax bill. This means they're not going to try to
make Google and Facebook's own a meta and various other
tech companies pay more tax than New Zealand. Simon Watts
is the Revenue Minister.

Speaker 3 (00:29):
High Simon, Hey, very good afternoon.

Speaker 2 (00:31):
Hither so did the Trump administration put you off?

Speaker 3 (00:35):
Look, it's a factor that we took into account. Obviously,
the recent developments that have been going on, including those
in the US, have naturally formed part of our assessment.
But at the end of the day, I took a
look at this tax. We've been looking at it a bit,
and it's got some real drawbacks and we've made the
decision to pull it from their gender.

Speaker 2 (00:54):
Did Trump administration talk to you guys one on one
or are you just reading the tea leaves from comments
they've made.

Speaker 3 (01:01):
No, there's no discussion one on one on this specific matter.
But you know, the reality is as you would expect.
You know, where we're taking a look naturally at all
of the factors going on. I think the thing about
this tax is it's got a number of drawbacks. It
doesn't actually tax profit, it actually tax income or losses,
so a company could actually be in losses and be
still subject to the tax. UK put in place this

(01:23):
in twenty twenty and what they found is actually the
tax has got passed on to consumers. And you know
that's a big issue for us in the cost of
living crisis. And you know, I had a number of
concerns on the actual underlying drawbacks of the tax, but
it's a big number on our P and L and
hence we wanted to make sure we kicked the ties
on that before we pulled it. The other big thing

(01:44):
is actually in April the OECD grouping of countries, which
about one hundred and forty countries, have made an agreement
to support a multilateral solution. I've watching New Zealand's part
of and our viewer is that's a better way to
progress on that, and so that work's going to probably
pick up in the next months to year to come
and hopefully brings a much more enduring solution to this problem.

Speaker 2 (02:05):
I think's actually going to happen though, I mean, because
multilateral things hardly ever actually bear fruit.

Speaker 3 (02:10):
Well, heah, it is hard to say, right, I mean,
you're right, these are challenging and ongoing conversations. But as
I said, you know, the one hundred and forty countries
to make a call in April of this year to say, hey,
we're going to work on it. The technical works actually
all being done. It's now ready for the countries to
get some agreement on it. That's a lot better than
where it was in the past.

Speaker 2 (02:28):
I mean, do we just need to accept that. Look,
we'd all love to tax Google and Facebook, but probably
just never will be able to.

Speaker 3 (02:35):
Well, look, the reality is, you know it might sound good,
but those that tax is going to get passed on
to consumers. So whether you're using Amazon or you're using
door Dashed or to your food, you know, those tax
are going to flow through to consumers. And this goverment's
really focused on making sure that we're not putting more
costs on New Zealanders. And this is one example of

(02:57):
us taking that pressure off in the future.

Speaker 2 (03:00):
Out of ten, what are the chances of power cuts
next winter?

Speaker 3 (03:04):
God, next winter? Although that's a bit you know, that's
I think that pretty low in the context of where
we are. But I am worried about energy security. Obviously,
my main focus is this winter, and obviously.

Speaker 2 (03:15):
This winter we seem to be okay. It's next winter
that's the problem.

Speaker 3 (03:19):
Yeah, but we've done a lot of actions to make
sure that this winter wasn't you know, coming into this
job back in January, this winter was at risk and
we've got a number of actions and around Stockpilot, Huntley
and all of that. But yeah, next year it remains
at risk. But I'm working pretty hard with all of
the players in the market to make sure we're mitigating
that risk as much as I can. And it's a
major it is my priority in the energy portfolio.

Speaker 2 (03:42):
Yeah, good stuff, Simon, Thanks very much, appreciate it. Simon,
Wat's Revenue Minister and obviously energy Minister. Will come back
to that in the tab.

Speaker 1 (03:48):
For more from Heather Duplessy Allen Drive, listen live to
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