Growing IRD aggression poses civil liberties threat – Lennard

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Civil liberties are under threat as the Inland Revenue wields its search and seizure powers more freely, a senior tax barrister warns.

The taxman’s use of its powers to search and seize property has risen seven-fold over the past five years, from 12 in 2007 to 85 in the last year.

Mike Lennard, a former senior IRD lawyer, says the surge does not appear justified given the high level of compliance by New Zealand taxpayers.

“As the commissioner herself said only a couple of months ago, our tax compliance is among the best in the OECD, “ Mr Lennard says.

In today’s print edition of the National Business Review, he explains why the trend concerns him and why questions need to be asked at the right levels of the Inland Revenue.

“Are we prosecuting people more and intruding on their privacy and liberty more because we need to do so or simply because we have lawyers and investigators who would otherwise have nothing to do?"

He notes that people on the receiving end of the IRD’s search and seizure activity tend to have somewhat chequered records.

“It’s easy for the department to say all of these people have bad compliance histories. They probably do.

"But the fact is, historically, infringements on civil liberties rarely begin against totally blameless people,” he says.

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Only for those that chose to live on the wrong side of the fence and to proof fairness in society still exists.

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What garbage. So IRD never made an error? Never abused their powers cos they didn't like someone? They are abusive bullies. They have always resisted checks and balances of their powers. The tax system is too complex, too costly and puts way too much power in the hands of a few highly excitable folk. It will forever be the barrier that stops NZ becomming a free society.

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Civil liberties against the IRD? That's rather an unusual expectation given that the IRD exists to collect revenue it has not earned and that it has no natural rights to, and to do so by coercion.

Or, put another way, do you think many people would deduct, assess, file and pay if compliance were optional?

From start to finish, the IRD is a coercion agency, and it uses coercion in the most systematic way imaginable because it has managed to achieve a very high degree of majority social acceptance, and for the minority who do not accept its legitimacy, it has managed to achieve a very high level of acquiescence. And of those who do not acquiesce, most pay and comply despite their objections in fear of the more visible and more immediate threats of coercion that await them. So those who actually object and seek to evade are such a small proportion of the tax revenue that the IRD can well 'care for' and 'manage' the taxes by its efforts to detect, deter and follow up on those who aren't complying.

The underlying unnatural 'legality' of taxation is to create an unnatural liability by legislation, and by its application through making assessments of the liability. Being an unnatural liability, its incidence does not fall on those who would be inclined to pay it. Unlike, for example, trade credit liabilities, the debtors do not need to keep their account within terms to avoid loss of supply. The IRD cannot limit the control its credit risk by refusing to supply to those who are not willing and able to pay so it has to resort to other means to control its credit risk. It cannot rely on voluntary disclosures because it is not in the interests of the taxed to make it easier to be taxed. There are two main ways the IRD gets information:
1. from taxpayers directly, and
2. from third parties, principally those who pay wages, interest, dividends and similar payments to the taxpayer.

Remember we are talking about civil liberties here. Such as privacy rights. Obviously when you are required to make disclosure about your financial affairs on threat of penalties, and in order to aid coercion to make you to pay a substantial proportion of your income for nothing in exchange, your natural rights to personal and financial privacy have disappeared, with respect to those affairs and the IRD. Disclosures made by third parties under the same threats about you is exactly the same, except your ability to protest, and to refuse to disclose is radically reduced. Your rights to be free from unreasonable and unwarranted search activities have been replaced with a systematic, nay universal, compulsory disclosure.

Civil liberties again. Like the right to be free from unreasonable and unwarranted seizure of property. The same third parties are also required to deduct and remit to the IRD proportions of your income payments. Again rights to due process and property have been replaced with universal seizure. No other (unrelated) creditor, even natural and legitimate creditors who have given value, have these debt collection powers.

So, with a population of 4 million people, and most people getting paid by third parties, say, a couple of times a month, there must be something like 100 million searches and seizures happening every year, all without any probably cause, warrants issued, due process or even reasonable grounds for suspicion by an enforcement officer.

Of course such a universal system of violation of natural rights is aided by police state powers of entry into buildings, seizure of documents, and powers to enlist private businesses to aid in fishing expeditions, and the making of exceptions for information that is given in confidence and subject to duties of secrecy such as bank customer information. No need for probable cause, warrants, or even reasonable suspicion. No need for the request to even be in writing. Fishing expeditions are allowed and practiced. And doing deals with other countries to ferret out information held in foreign countries in exchange for denying the rights of foreigners with assets, information or business in New Zealand. In many cases fishing expeditions are allowed even for information held outside New Zealand.

Clearly the IRD only has found the need to actually some sort of watered down legal process to search and seize property directly 85 times in a year because the other 100 million unwarranted searches and seizures are so effective at collecting about a third of economic output by softer forms of coercion going under Orwellian names such as voluntary compliance.

Although I'm all for civil liberties, and would not like to see the IRD become like the IRS who reportedly levies assets around one million times a year, but there seems to be a lot more to civil liberties than the 85 search and seizures a year you are complaining about.

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If it were once it would be a problem.

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After the absolute balls-up in the Dotcom fiasco this area will need to be watched very closely.

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And of course as a taxpayer representative, Lennard has no vested interests here ?? Bet he didn't complain whilst he was at IRD.

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Mr Lennard left the IRD before this trend developed. Your comment is misplaced and should be aimed at those who sign these searches and seizures off currently. Or perhaps you just don't know who does that right now. If there is anyone who is well placed to know the limits of the IRD's powers (or the restrainted use of them) then it is Mr Lennard.

You can be sure that this article will win him no friends in the IRD. So kudos to him for raising the (obvious) issue.

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