Tax man reaping little in return for extra spending

new-zealand-labour-party

Tue Jan 13 2015 13:00:00 GMT+1300 (New Zealand Daylight Time)

Tax man reaping little in return for extra spending

Tuesday, 13 January 2015, 4:00 pm
Press Release: New Zealand Labour Party

Stuart
NASH
MP for Napier

13 January 2015 MEDIA STATEMENT

Tax man reaping little in return for extra spending

The National Government has more than doubled the amount it spends chasing tax debt but the level of outstanding tax remains at a near record high, Labour MP Stuart Nash says.

“Answers to written questions from Labour show the Inland Revenue is now spending $90 million a year chasing tax debt, up from $38 million in 2009.

“However, the amount of tax outstanding for the past financial year is $5.03 billion – second only to 2012 when $5.06 billion was owed.

“The Inland Revenue spends $90 million chasing debt but has no process and makes no effort to return the $750 million it currently holds in overpaid taxes.

“The irony is that the IRD is using substantial unclaimed taxes to fund tax collection of those who aren’t paying. Surely, the right thing to do is put as much effort into returning overpaid taxes as they put into chasing those who haven’t paid.

“This is also a department that spent over $59 million on consultants and contractors last year; or $285 million since National came to office. That included $31 million on consultants and contractors for ‘specialist advice and project management’. It also spent a further $2.2m on property advice and $2.2m on human resources and change management services.

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“Let’s hope this pricey change management advice included advising Revenue Minister Todd McLay about the type of proactive tax services New Zealanders would like to see.

“That includes developing a process to give money back as well as collect it and putting a cap on the outrageous consultants bills being racked up by his Ministry, Stuart Nash says.

Attached: Answers to written questions 08138, 08135, 08251 and 08201 from the Minister of Revenue

Question 08138: How much money has the IRD budgeted for the collection of overdue tax debt per year over the past 6 years?

Reply: The following table shows the total amount spent on the collection of overdue tax for the last 6 financial years.

The figures below are the same as the total debt costs associated with Output Class 4.

Financial
year ending

Total debt cost^

30/06/2009

$38,692,638

30/06/2010

$39,986,135

30/06/2011

$59,892,810

30/06/2012

$68,497,672

30/06/2013

$73,820,209

30/06/2014

$90,058,103

^Including Child Support, Student Loans, KiwiSaver and Working for Families Tax Credits debt collection costs.

Question 08135: By how much has overdue tax debt grown per year over the past 10 Years?

Reply: The following table shows the total overdue tax debt, and growth, per year for the past 10 years.

Financial
year ending

Overdue tax debt

Yearly growth

30/06/2005

$2,524,198,641

$402,224,234

30/06/2006

$3,110,200,700

$586,002,059

30/06/2007

$3,349,238,468

$239,037,768

30/06/2008

$3,619,228,165

$269,989,697

30/06/2009

$4,543,142,596

$923,914,431

30/06/2010

$4,572,959,212

$29,816,616

30/06/2011

$4,815,560,847

$242,601,635

30/06/2012

$5,061,763,090

$246,202,243

30/06/2013

$4,948,028,184

-$113,734,905

30/06/2014

$5,030,798,711

$82,770,527

The growth of the debt portfolio in 2008/09 is affected by historical factors such as the effects of rising revenue, coupled with consistent increases in the customer base. However, with the economic recession, there are a number of new influences including:

• financial pressure on customers available funds which force them to prioritise payment obligations
• increases in bankruptcy, liquidation and receivership cases
• our focus on investigating avoidance schemes, which generally results in increases in deferred debt while legal action is being completed

PQ: 08251 (2014) Stuart Nash to: Revenue

Question: If outside consultancy services are used what is the cost by department, of those employed by the IRD per year for the past six years?

Reply: The following table shows the total expenditure of Consultants and Contractors, by department, for the last 6 years.

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14

$000

Information technology

24,878

13,559

14,829

14,023

17,882

20,481

Specialist advice and project management

13,433

7,922

13,127

26,552

29,151

31,436

HR and change management services

1,605

943

744

938

778

2,225

Tax issues

12,698

1,941

780

1,473

669

1,179

Property

2,860

4,419

2,936

1,964

2,074

2,023

Research

1,000

1,294

1,660

1,448

1,113

1,325

Communications

662

155

257

156

343

123

Other

2,096

596

840

751

897

399

Total

$59,232

$30,829

$35,173

$47,305

$52,907

$59,191

Reference: Inland Revenue Annual Report 2014, page 135

Subject: 08201 (2014) Published - Revenue - Corrected Reply

Question: What is the total amount of money the IRD is holding in uncollected tax refunds?

Portfolio: Revenue

Minister: Hon Todd McClay

Date Lodged:13/11/2014

Answer Text: Personal tax refunds can be claimed for the current tax year, and up to four prior years. For the 2012/13 tax year, the aggregate unclaimed (but still claimable) refund amount is approximately $750 million. This figure will change as each filing season progresses, returns are progressively filed, and prior years are no longer accessible.

Attachment: None

Date Received:20/12/2014

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