Luxton JoPart 4 Amendments to other enactmentsJO LUXTON (Labour): Thank you Madam Chair. It's a pleasure to take a call on this the Taxation (Annual Rates for 2017-18 Employment and Investment Income and Remedial Matters) Bill. I also join in the trepidation of the previous speaker Greg O'Connor about speaking on this bill. I have to say that taxation is not something I'm hugely familiar with or that is a definite strength of mine. I want to thank the Finance and Expenditure Committee for the work on this bill. I can imagine that it would have been fairly time-consuming but I think that the bill is fit for purpose.The purpose of this bill is to simplify and improve taxpayers' experience of tax administration in New Zealand and let's face it anything that simplifies and improves individuals' or businesses' taxation situations has got to be a good thing right? I know for myself as a business owner that I'd welcome any legislation that makes life easier and in particular the part that has just been passed Part 3 will definitely have some benefits. Part 4 covers amendments to other enactments and is a big chunk of the remedial matters mentioned in the bill's title. Part 4 includes necessary updates by amending the KiwiSaver Act 2006 the Student Loan Scheme Act 2011 the Goods and Services Tax Act 1985 the Child Support Act 1991 the Accident Compensation Act 2001 and the Income Tax Act 2004. The amendments found in Part 4 of this bill are important to ensure maintenance of our broad based - low rate tax system and this is part of the reason that the bill was reinstated by Minister Nash.I'd like to speak about clauses 308 and 310 of this bill that amend the Goods and Services Tax Act 1985. It is widely noted that the best feature of our GST system in New Zealand is its simplicity. It catches virtually all goods and services in New Zealand ensuring that the tax system doesn't introduce distortions caused by unequal taxation. It is important that this House continues ensuring that we have a taxation system that doesn't increase compliance costs and this is what clauses 308 and 310 do. Currently associated rebates paid by suppliers to Pharmac under an agreement for listing on the pharmaceutical schedule have a different GST treatment depending on whether the pharmaceuticals are purchased in the community setting or in the hospital setting. Pharmac buys drugs and then onsells them to pharmacies and district health boards and sometimes suppliers give Pharmac big discounts due to the volume of drugs that Pharmac is buying and Pharmac passes these discounts on by way of rebates. There are GST consequences for this but it differs between rebates paid to hospitals and rebates paid to pharmacies. But the basis transaction is the same; it's just that they get defined by the Goods and Services Tax Act that makes a difference. So the result is that Pharmac and the drug suppliers face a lot of uncertainty in working out whether or not GST applies to a particular set of rebates and they spend a lot of time and effort sorting it out. So it is a big issue with compliance costs and we always want to reduce compliance costs where possible especially if there are no actual tax consequences.Compliance costs make it easier and less expensive for people to comply with the law in general and in this case with tax law. It's always an issue with tax law given its complexity. What we need is we need for Pharmac to be spending its money and hours of labour on ensuring that New Zealanders get the medical access to the pharmaceuticals that they need not wasting time on tax compliance and having to differentiate between community and hospital rebates. It's about creating a fair and equal system with regard to paying GST.