By Bernard Hickey
Prime Minister John Key has announced Budget 2014 to be released on Thursday would include NZ$132 million in new spending over five years on a fresh crackdown by the Inland Revenue Department on chasing up unfiled tax returns.
Key told his weekly post-cabinet news conference in Wellington the crackdown was forecast to raise an extra NZ$300 million in tax revenues over the next five years.
"The Budget on Thursday will also continue the government's focus on ensuring the revenue base is protected and that everyone is paying their fair share of tax," he said.
IRD would employ more staff to contact 'tardy' taxpayers and writing off tax unlikely to be paid.
Key said the latest measure was in line with the Government's moves since 2010 to boost IRD's funding to collect more tax from the hidden economy, the property sector, aggressive tax planning and fraud. He said these measures had allowed IRD to collect an extra NZ$530 million in gross revenues.
Revenue Minister Todd McLay later announced the extra spending would include NZ$48.6 million in cash to Inland Revenue to undertake the crackdown and NZ$84 million to cover tax being written off because it was unlikely to be paid.
McLay said the new funding was forecast to breing in NZ$297.5 million in fresh revenue over the next five years.
The Government included a crackdown on unfiled returns in its 2012 Budget, which McLay said focused on reducing outstanding tax return volumes and targeting returns with higher revenue values.
He said IRD's focus on unfiled returns had generated an extra NZ$106 million since July 2012.
"Turning a blind-eye to tax non-compliance is not an option - we all must pay our fair share," Mr McClay says.
Labour jobs and surplus target
Meanwhile, Labour leader David Cunliffe announced a Labour-led Government would target an unemployment rate of 4% by the end of its first term and run a budget surplus in every year, unless there was a significant downturn. Here is the full policy document.
"Labour’s priority is to create better jobs that pay higher wages for New Zealanders. That’s why a major target for the next Government will be getting the unemployment rate back to the levels of the last Labour Government, before National came to power," Cunliffe said.
He said Labour would continue to be fiscally responsible.
"The previous Labour Government ran nine surpluses in a row compared to the five deficits under National. The Government I lead will run surpluses every year unless there is a significant downturn," he said.
Unemployment was 6% in the March quarter of this year, unchanged from the previous quarter. Treasury forecast in December the rate would fall to 4.7% by 2018, while Key said the Budget 2014 forecast was for a fall to 4.5%. English said on Thursday Treasury was forecasting a fall to 4.4% by 2018.
Key said Labour's targets were not as important as its policies, which he said were against growth.
"In the end this is a pipe dream. It's not an alternative budget," he said
(Updated with more background, detail, Labour background, policy document)
4 Comments
This government has been tightening loop holes regards deductabilty on my farm for years. Its getting harder and harder to claim something as a working expense and with what my accountant charges not worth the time. Its a tax increase in disguise for a lot of us that are self employed. Chasing us so we just don't bother making the claim. Lots of small lifestyle blocks were claiming deductions, I doubt any are now.
The Tax man is increasing his grip. Key is trying to do it and look friendly at the same time
Newsflash: the Internet.
The laughable thing about this media announcement is it's almost certain it's all hype for election year.
As most accountants and tax agents will be aware, the Government is largely reliant on them to encourage the vaste majority of tax payers to comply with their tax return filing obligations.
If the Government really WERE serious about chasing up outstanding tax returns, it would facilitate things more with tax agents ... you know work with them as a strategic partner using the latest in technology ... modern REAL TIME online reporting.
But no! Developing an sophisticated online website to support this is 'cost probititive'.
Currently, all the Inland Revenue Department does is circulate ad hoc filing reports by snail mail. Hardly a successful or forward thinking formula for chasing outstanding reports!!
... David, Tax Agent, Wellington
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