Tax crackdown bridges revenue loss from partial asset sales: Dunne
BUSINESSDESK: The Inland Revenue Department's clampdown on tax avoidance and loopholes will bridge the gap left by the government's planned sell-down of its energy company holdings, Revenue Minister Peter Dunne says.
Measures in last month's Budget to tighten tax breaks for mixed-use assets and livestock, along with giving IRD a longer leash to chase tax dodgers and a hike in petrol and tobacco excise, will net $1.73 billion over the next five years, he told Parliament's finance and expenditure committee.
That is ample cover for the $94 million annual projected shortfall left by the government's plan to sell minority stakes in MightyRiverPower, Genesis Energy, Meridian Energy and Solid Energy, and should keep a lid on future tax hikes.
The measures are "returning significant amount of revenue to the New Zealand government over the next few years, all of which reduces the likelihood of there needing to be tax increases", Mr Dunne said.
"If Mr [Clayton] Cosgrove wants to talk about $100 million a year, by my calculation, $1.734 billion over five years is far in excess of that."
The Mixed Ownership Model Bill went through committee stage in Parliament yesterday and is expected to pass its third reading this week.
Committee chairman Todd McClay ruled out questions put to Mr Dunne about his casting vote on the legislation enabling the partial privatisation programme, which is needed get the bill through the House, saying they were out of order.
When questioned whether he had taken any advice on the partially privatised state-owned enterprises engaging in tax minimising behaviour after the sell-down, Mr Dunne said Inland Revenue will take the same approach.
"Where those gaps have been identified, they’ve been closed. That will continue to be the policy," he said. "Our focus is on getting in the revenue that is property due to us."
Mr Dunne talked down the grimmer fiscal forecast by the Reserve Bank last week which projected the Crown won't return to surplus until 2017, two years after the Treasury's target, saying the Budget numbers were only one month old.
When questioned about the Income Tax Act's definition of income, he said it is being broadened, though he couldn't be more specific.
He also said he hasn't discussed the prospect of introducing a capital gains tax with Finance Minister Bill English for about two years, when it was raised by the Tax Working Group.
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Comments and questions10
How did this man ever get called "Mr Sensible"?
If Mr Dunne could only stand back and see how totally pathetic this all sounds.
The bouffant one making a buffoon of himself, again.
Dunne and dusted.
Really its OK to sacrifice the Assett sales because we can squeeze more taxes out of the people who are paying the most already.
Time our 30 year plus professional polititions were long gone before the few who pay all the tax decide to leave also.
Keep going down this pathetic road, and you'll find yourself on Italy's path very soon!
I have to be extraordinarily careful in this post, because over just the last two weeks Mr Dunne, by acting promptly in clarifying some loose ends flowing from this year's budget, saved a young couple a lot of stress and allowed them to plan their tax affairs arising from a 'freak' set of circumstances, which are not the subject of this post.
So thank you for that Peter. However, that said, and as I say on my blog, despite the IRD staffers I deal with are, to a last one, good people, it doesn't change the principles involved with tax administration and enforcement.
Salary and wage-earners who read NBR, and Mr Dunne, can never have an idea of the absolute invasion of their privacy, and hence their lives, involved in an IRD tax audit. There's nothing civilised about it. It's strangers combing through your life, sometimes the most intimate parts of it. It's in your face. If you've got it wrong, innocently, you can lose your livelihood from it: it's the ultimate sign of how our social democracy is at base a police state, and not a nice state.
So, when we have to stand and watch out of control government spending, and despite the rhetoric of this National government, their spending just keeps increasing year on year, and they are still borrowing, and then we are told in a press release like this that the government will try to extort more money from the innocent my a tax crackdown, then it's more than ugly. And it's a disgrace.
There was a very important war for independence fought for less than the indignities our social democracies are enacting on the innocent businesspeople who finance them, daily. And I know I'm not alone, indeed, an unstated migration of the 'rich' from the West proves it, that many of us are utterly over being treated in such an appalling manner as this. Get the state under control, actually do it, and leave out your declaration of war, for that's what this press release is, on the good people of New Zealand who do not deserve this.
what i would say to NZ having had an audit is not printable. And I no longer file returns. They didnt keep the law. Plain and simple. So I no longer participate. Keen to pay tax. Deeply patriotic. But I wouldnt do business with punters like that and so Im certainly not going to encourage their conduct. Takapuna IRD. No clues.
Im always amused by the pursuit of the so called rich to make sure they pay their ,"Fair Share of Tax". When 55% of the population are nett contributors of nothing and the top 10% pay nearly all the tax.
Could someone please describe or define, A Fair Share of Tax????
Peter robbed, and Paul paid twice over.
National and Act campaigned on asset sales. Dunne did not. Hardly anyone voted. The government has no mandate to sell assets.
So, given a) the above, and b) the market's in a slump, and c) even if it wasn't, retaining the assets would still deliver their shareholders more revenues than selling them, and d) that selling them back to some (not all) of those who already own them will increase social inequalities; clearly, the whole thing's a rort.