Cooks govt working with pensioners refusing to pay tax

Transcript

The Cook Islands government says it is encouraging superannuants refusing to pay taxes on their New Zealand pensions to set up small payments to keep up with what's owed.

In an ongoing dispute, Grey Power says it will continue to march in protest at taxes on their pensions when parliament sits again.

The group says members are willing to go to jail over the tax-back issue, and has advised pensioners to chase away anyone from the Ministry of Finance who comes to visit to collect the tax.
 
The government's Financial Secretary, Richard Neves, says paying up is a matter of law and equity.

RICHARD NEVES: We have to recognise an equity argument. There's two parts to this. I think we have around 250 pensioners here in the Cook Islands who are in receipt of New Zealand superannuation. Probably almost half the people who are eligible under the Pacific Portability Scheme out of New Zealand, they pay a lower rate of tax here than they would in New Zealand. I think in New Zealand you pay around 17 percent on that first amount. We don't tax the first $11,000 of anyone's income. And then we have a fairly low threshold after that. And the second equity part is really that people's incomes, the NZ superannuation is a reasonable income compared to other people receiving incomes here in the Cook Islands. And yet they pay the tax according to law. So I guess they are the two equity issues that I look on in that respect. And the third one is that people who are in receipt of the Cook Islands pension, and you can't get both, you can get one or the either, are also included in the tax net. So if they are working and receiving the Cook Islands pension at the same time we get some of that back as well.

MARY BAINES: So how many people are not paying tax on their pensions now or refusing to do so?

RN: Well I think we have around 40, between 40 and 50 in the latest numbers that we have. But we are just taking a slow, methodical approach. Lots of people have come up voluntarily and come up with a way to cover off, and that's usually on getting some automated bank deductions. And the approach that we are taking is that after visiting, we have had a number of visits to New Zealand superannuants, we have tried to be understanding, to essentially make arrangements for the bank to just deduct a regular payment out. We won't be taking big amounts but just the amounts needed to ensure that people don't fall into a situation where they owe us lots of tax. We want to avoid scenarios where people have large tax bills owing to the Ministry of Finance.

MB: So those who continue to evade paying tax on their pensions, is jail an option?

RN: We are not going to send anyone to jail. I think that's very emotional discussions. We will simply get to a point where we will deduct a regular amount from their bank accounts. Ultimately if people want to take us to court, they're quite free to take us to court. But the simple fact they haven't taken us now leads me to believe that they probably understand that if they got to a court of law, they probably wouldn't be a very strong argument. Particularly when we have gone to significant efforts to appease NZ superannuants. If people recall we actually had to pass a special law to get rid of what people claimed by back-taxes, which was simply amounts that people hadn't complied with in previous years. And we had to fork out nearly $250,000 in taxes that people had already paid back so that people were back on an even keel.