Smith NickHon Dr NICK SMITH (National—Nelson): Thank you Mr Chairman. It's a pleasure to take a call on Part 2 of this Taxation (Annual Rates for 2018-19 Modernising Tax Administration and Remedial Matters) Bill. We're dealing with over 100 clauses in this part and there are two that I want to particularly focus on. I come to this bill from the values perspective that we want New Zealanders paying less tax. We want them to keep more of what they can earn. I also think it's really important in tax legislation that we focus on a less complex tax system. There are a number of provisions in this part that actually add to the complexity and add to the compliance costs of our tax system. I particularly want to focus on new section 91EK in clause 61 that deals with the questions of rulings by the Inland Revenue commissioner. Now I think the mechanism of a taxpayer being able to apply to the commissioner—and saying Hey look under these circumstances" and getting a binding ruling about the impact on their tax affairs—is a good thing. I also think it's a good thing that that is time-constrained. In subclauses (1) (2) and (3) of section 91EK there is quite a big out clause; that is where the Inland Revenue commissioner can decline to give a ruling under a number of grounds and I have some concerns that those grounds are so wide.Now the reason I'm so interested in these provisions is that we've seen some quite big changes by this Government to the broader tax code. So for instance we've had the Government introduce their so-called research and development tax reclaim system. The billion dollar question is whether a whole lot of activity out there that's been going on anyway that's got little to do with research and development is going to be redesigned by accountants into being a refundable activity. Members on this side of the House are highly doubtful that those measures are in fact going to result in New Zealand improving its investment in research and development. It was fascinating last week to see that over National's term in Government there was a big increase in the matter of both public and private sector research and development and I fear that these provisions are simply going to result in creative accounting and a more complex tax system. So my question for Willie Jackson the Minister in the chair is: are the provisions around the rulings provided in section 91EK now required because of that R & D tax deductibility?I also note that in this bill we've got these ridiculous provisions where if you've got a good-looking racehorse then you're now going to be able to get a tax reduction. We're highly doubtful of the merits of that. We know that members of New Zealand First have been very well endowed by those in the racing industry. We know that some of them broke the electoral laws in their contributions to the New Zealand First Party. So my question to the Minister in the chair is: are these new processes all designed around defining and getting rulings on what a good-looking racehorse is so that those benefactors of New Zealand First might get their tax refund? If you look at the substance of the law that is providing for this tax break for a very very small group of New Zealanders it seems to me that the law is incredibly vague and in fact this rulings process that's provided for.Of course what will be on the minds of hundreds of thousands of New Zealanders as they work through the complexity of the proposals around a capital gains tax are really these provisions around providing a commissioner ruling. Is this the new mechanism that's going to be required around the huge complexity that's going to be added to literally over a million taxpayers with the proposals for a capital gains tax? I'd love for the Minister in the chair to answer those questions around the relationship of this new rulings process around the proposed capital gains tax with respect to the new good-looking racehorse tax deductibility and with respect to the R & D tax liability.The second set of issues that I want to ask the Minister about are those that are provided in respect of new section 16 carrying through to new section 17 in clause 15. This is with respect to the quite extensive provisions that are proposed in the sharing of information. Every member of this Parliament will know that there is a huge sensitivity around the confidentiality of information that is provided to our Inland Revenue Department and what we have in these provisions is the capacity for the far greater sharing of information with a whole range of different agencies. So there's going to be more extensive sharing of information with ACC with the New Zealand Superannuation Act and with other Government agencies including the National Provident Fund board. I really want the Minister in the chair to answer the question as to whether all of these provisions are indeed required—indeed do these provisions comply with the new Privacy Act that Parliament is currently considering—and whether they are consistent with the commitments that were made by the Government in respect of the extent to which information is shared between different Government agencies.The third point I'd like to make is in respect of the fixing up of a number of mistakes that were made by the Government in last year's tax changes. So what we have here is the Government making tax changes only last year and then rolling into the Parliament this year and saying "Oops! We messed up this bit." or "We messed up that bit and we have to patch it up." So the question I've got for the Minister in the chair given that this part contains over 100 clauses is: will he take responsibility for any errors in this law? I remember when Parliament was sitting just two weeks ago we had a Minister blame officials blame the Parliamentary Counsel Office and all sorts of other people for the error and actually we were challenged for even daring to question the sorts of provisions that I just have in three particular parts of this bill—only to have the Government come back the next week and say "Oops! We stuffed up. Actually the Opposition were correct." Actually National was right; the Government was wrong and they embarrassingly had to come back to the House and patch up their mess.So the reassurance that I am seeking from the Minister in the chair is whether he will accept responsibility for these 100-plus changes. Again I emphasise that whether it's been in terms of extending the tax base to overseas entities whether it's been some of the other tax changes that were made last year even things like the winter energy payment—the Government screwed up. They made serious mistakes in the law. They've had to come down to the Parliament and patch them up. Will the Minister that's sitting in the chair accept responsibility for the detail of these 100-plus provisions that are contained in Part 2 of this bill and that are extensively detailed?I'm particularly looking forward to an answer from the Minister of Revenue around those questions of the interaction of this law around the R & D changes I've mentioned in respect of the good-looking racehorses tax provisions and in respect of the other tax increases that this Government has imposed and what their relationship is with those new rulings that are going to be provided by commissioners. I'd like the Minister in the chair to deal with the information-sharing questions that I've raised that are covered on pages 22 23 and 24 of the bill. Is the Minister absolutely satisfied that those information-sharing provisions are absolutely required and can assure us on those? Again I draw attention and I'm looking for that reassurance from the Minister that he will accept responsibility for these 100-plus clauses in Part 2 given the Government's got a pretty poor record of getting the detail—[Time expired]"