19 Jul 2017

IRD keeps 'secret' impact of proposed changes

12:52 pm on 19 July 2017

Inland Revenue has refused to reveal how proposed changes to the tax system will affect its take, saying it's a "secret".

The government last month unveiled plans to let IRD chase owed tax and give out refunds without people having to file a tax return.

At the time, Prime Minister Bill English said he did not know what impact it would have on the government's tax take, but expected it would be roughly neutral.

In response to an Official Information Act request from RNZ, IRD revealed it had endeavoured to calculate the figure.

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Prime Minister Bill English Photo: RNZ / Brad White

It refused to divulge its findings however, saying it was a "tax secret" under the Tax Administration Act 1994.

In a statement, IRD policy manager Mike Nutsford said releasing the information would be "detrimental" to the law reform process and wider integrity of the tax system.

"Officials have not yet reported to the Minister of Finance and Minister of Revenue on the submissions and final policy proposals for their consideration."

Mr Nutsford said ministers should have an opportunity to consider the submissions and officials' advice "in an orderly manner".

The changes are out for consultation until 28 July.

Last month, Mr English said the changes would make the tax system fairer and simpler, benefiting about 3 million people.

He said people would find it easier to claim entitlements and IRD would have more freedom to pursue those who owed tax.

As a result, he expected the effect on the tax take would be "pretty much in the balance".

"It's very difficult for people to get it right, with the best of intentions.

"And the effect of that - particularly around family tax credits - is that a significant proportion don't claim and therefore don't get the entitlement."

The proposal would cover taxpayers whose only income comes from a salary, wages or investments.