Katene Rahui: Taxation (GST and Remedial Matters) Bill — Second Reading 
Katene Rahui: Taxation (GST and Remedial Matters) Bill — Second Reading 
[Volume:669;Page:15776] 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 Before I start my speech I mihi to the whanau of the miners in Greymouth and say what a great tragedy it is. I pass on my aroha and I am sure the aroha of other members in the House. Ma te Atua koutou e manaaki e tiaki. 
[ 
God will care for and protect you collectively 
.] 
I am always pleased to speak to a bill the Taxation (GST and Remedial Matters) Bill whose purpose is described as to “maintain the integrity and fairness”. I am even more pleased to make the connection between integrity fairness and GST because of course it suggests to me that this bill may well be the opportunity to promote the groundswell of support that emerged out of my member’s bill the Goods and Services Tax (Exemption of Healthy Foods) Amendment Bill which proposes scrapping GST on healthy food. Healthy eating will save millions of dollars in costs associated with poor health. It is an investment in a healthy future and an investment in integrity and fairness if ever I heard one. 
I will share with the House the finding from Professor Tony Blakely from Otago University’s public health department. He has been looking into whether price discounts change people’s eating habits. The study found from a survey of 1100 shoppers that a 12.5 percent drop in price increased people’s consumption of healthy food by 11 percent. The exemption of healthy food from GST is therefore designed to give New Zealanders a fair chance to get off fast foods and on to healthy foods. I say sorry to Aaron but he would have to come off those fast foods and start eating healthily. It would be a real encouragement for him. What better way to do that than to send a clear price signal? The study basically concluded that people ate more healthy food if they were sent the right price signal. 
I could with much pleasure focus my entire contribution to this debate on the importance of removing GST from food. At this stage it appears that neither the Minister of Revenue nor the Government has seen the wisdom of such a great approach but hope springs eternal. 
The focus then of this bill is to create greater clarity around certain parts of the GST rules to make it easier for taxpayers to understand their GST obligations. We fully endorse this approach. We are all for accountability transparency and knowing what one’s obligations and responsibilities are. Although the intention of this approach is described as helping to reduce compliance costs for businesses we also think it is about good government—assisting citizens to appreciate their entitlements and comply with their obligations. 
An important initiative in this bill introduces measures by which to prevent so-called phoenix fraud schemes. In essence this is when a registered purchaser receives a GST refund from the Inland Revenue Department when in fact no corresponding GST payment has been made by the supplier of the transaction. The Maori Party supports this measure as a way to close off a loophole to ensure fairness and integrity right across the taxation system. 
We are concerned about the proposal to amend the definitions of “commercial dwelling” and “dwelling” within the Goods and Services Tax Act 1985. The definition of “commercial dwelling” is to be redefined to include homestays farmstays and serviced apartments. “Dwelling” will also be redefined so as to refer exclusively to a dwelling that is owned and occupied by its residents. In August 2009 Brian Fallow the economics editor of the  
New Zealand Herald 
 suggested that it was time to add GST to rents and mortgages as currently housing is perceived as a no-go zone for the taxman. This could all change with the bill’s redefining of the term “dwelling” to include only premises that are occupied by their owners. Rental properties will therefore be excluded from the definition of “dwelling” which could in effect provide for GST to be added to the mortgage payments of New Zealand’s owner-occupier residents without any effect to rental properties and their tenants. 
Another new measure introduced by this bill responds to the unintended timing problem for non-profit bodies accounting for GST when they supply a large asset such as a house to a person in need. I commend the Government for continuing to take into account the unique needs of non-profit bodies by amending the Goods and Services Tax Act 1985 in order to reduce the negative impacts and timing problems created when accounting for GST. As a constituent MP representing a Maori electorate I know that our non-profit bodies our volunteers and our voluntary groups are the unsung heroes of our community. In many ways they provide the essential fuel to keep our communities thriving—nowhere more so than Greymouth at this time. We see the Red Cross and civil defence volunteers out there helping as much as they can the students from the polytech and of course all the people behind the scenes who are providing all of the cups of tea and so on that are helping the families and others to get through this hard time. It is very helpful to see the Government trying to support these volunteers in their mahi. 
Non-profit bodies can often be resource-rich but cash-poor—a bit like the Maori Party actually. This can put real strain on their ability to plan and make good strategic decisions. These bodies work for a public good and therefore it is important that the Government ease their financial pressure wherever it can. 
There are already listed on an Order in Council some special rules for non-profit bodies when it comes to GST. They are eligible to use a payments basis even if their turnover is over the normal threshold of $2 million. The proposed amendment adds another welcome exemption in this complex area of the law. The legislation normally requires organisations that account on a payments basis to switch to an invoice basis when both the amount payable for a supply of goods or services is $205000 or more and payment is deferred. This amendment grants an exemption to non-profit bodies. It is a most welcome amendment. 
The way the current system works it is possible that in the case of a large asset such as a house the non-profit body would have to account for the GST on the entire purchase price at the outset creating a significant cost to the non-profit body. Consequently the operation of the rule may discourage non-profit bodies from providing goods and services over a certain value. The change proposed in this bill will provide a solution to this concern in situations where the tax-base risks are minimal. 
Another detail of the bill relates to donee status. Keeping a donee list up to date is key to payroll-giving legislation which came into effect earlier this year. Again it is another important means by which communities can keep functioning. 
The bill also introduces an interesting set of measures relating to the emissions trading scheme. It aims to clearly define the values of the emission units that will be traded through the scheme as well as when these values will be applied to the units throughout the calendar year and income tax year time frames so that these values can be made available for income tax purposes. I will be very interested to learn what consultation the Minister has had with the Iwi Leadership Group about this particular measure. 
Brokering a relationship between the Treaty partners was a key feature in the Maori Party’s negotiations over the emissions trading scheme. The negotiations allowed us to bring together the two Treaty partners: iwi and the Government. So Maori values are taken into account not only in this scheme but in this country’s overall legislative approach to addressing climate change issues. It also provided the means by which the Crown would understand its obligation to consult. We look forward to seeing how this relationship will translate into a practical reality throughout the select committee. 
The many varied aspects of this bill ensure we will continue to have an active interest in the evolution of the Taxation (GST and Remedial Matters) Bill. At this point in time we will support the bill at its second reading.