Personal information held by the Inland Revenue Department (IRD) could be given to credit rating agencies if proposed changes to privacy of tax information go ahead.Inland Revenue Commissioner Bob Russell told Parliament's finance and expenditure select c
Personal information held by the Inland Revenue Department (IRD) could be given to credit rating agencies if proposed changes to privacy of tax information go ahead.
Inland Revenue Commissioner Bob Russell told Parliament's finance and expenditure select committee today the secrecy of personal information was very important to the IRD.
However, loosening the controls on taxpayers' information was part of the Making Tax Easier proposal currently open for public consultation.
The IRD is currently required to keep tax information it collects secret, with few legal exceptions.
The changes proposed under the Making Tax Easier proposal would make it easier for the IRD to share information with other government agencies, particularly the Ministry of Social Development, which administers benefits, and non-government agencies.
MPs today expressed concern that personal information could be given to credit reporting agencies.
The move was aimed at increasing taxpayer compliance.
The theory was that people were more likely to pay their tax debt if they knew the debt could adversely affect their credit rating and therefore their ability to borrow money, the proposal on the IRD's website said.
Before the information was released the taxpayer concerned would be notified and offered the chance to pay up.
Changes would also allow the IRD to communicate with a family member of a deaf or non-English speaking person over the phone.
Labour MP Shane Jones said he would be concerned about people's information being given to credit agencies.
Fellow Labour MP Stuart Nash also highlighted the possibility of giving information to credit rating agencies and said it could compromise public trust in the IRD.
Mr Russell said the integrity or the tax system and the public's trust in the IRD had to be maintained.
The secrecy of taxpayers' information meant the IRD could not send a letter to the family of a dead man after accidentally hounding him for tax payments, he said.
It also meant a member of the public could make allegations against the IRD and it could not comment publicly.
"There's nothing to prevent any citizen from making any wild allegations about the behaviour of the IRD and in most cases, unless it gets to court at some future date, we can never tell our side of the story," Mr Russell said.
"What's that doing to the integrity of the tax system, if it's in the media and people believe that we've done things and in fact we haven't."
Deputy Commissioner Robin Oliver said reducing the secrecy of personal information would have benefits as well.
"When an employer makes a mistake, we have to go back and correct that so it's amended. Our current privacy rule is a hindrance to that because that's dealing with personal information."
The Making Tax Easier proposal also looks at moving from a paper to electronic-based system.
The IRD sends out about 100,000 envelopes every working day and receives more than 4.4 million phone calls annually.
Mr Russell acknowledged there would be some people who took a long time to move to doing their tax returns electronically but businesses were likely to move faster.
Legislative changes would be needed to accompany the move to e-based services.
One change would be getting rid of the end-of-year reconciliation and making tax payments full and final. That could eventually mean an end to tax refunds and rebates.
