Policy Area: Taxation

Statement of General Direction:

Underpinning a strong economy must be a fair regime of taxation, promoting so far as is possible voluntary compliance by taxpayers, with strong enforcement, and heavy penalties for non-compliance. The way in which tax laws are implemented also requires attention.

Key Initiatives of Policy:

As a matter of urgency, establish a committee of experts as agreed by the Parties to recommend to the Coalition Government on these issues:

• Use of tax driven structures lacking business reality
• The adequacy of penalties, including criminal penalties, for tax evasion
• The coherence of the tax system
• Abuse or complicity by advisors
• High compliance costs
• Lack of prosecutions to prevent harmful tax practices and schemes
• Treatment of failure to disclose (or falsification of material facts) by a person experienced in tax matters as a serious criminal offence, and establish it as punishable by a maximum penalty of 10 years imprisonment where more than $5 million in tax revenue is involved
• Concealment and other tax related offences
• Recovery from large scale tax evasion schemes (say $100,000 and over) and those who aid them, of profits attributable to the use of unpaid tax (unjust enrichment)
• How to achieve disclosure of tax schemes affecting the instance of tax payable by greater than $100,000
• Any other matters the committee considers relevant to their examination.

The committee of experts will, in due course, review the recommendations of the Davison Commission so far as they relate to tax matters and incorporate their views as part of their own report.

Where companies have been involved in concealment of profits and income to the disadvantage of New Zealand's revenue pool any assets which are attributable to the use or availability of unpaid taxes ought to belong to the people of New Zealand. Not only should the tax be returned to the nation, but equity and assets that have been acquired as a result of tax evasion should also be confiscated.

Establish a specialist taxation prosecution unit within the Inland Revenue Department, whose mandate shall be to investigate and prosecute tax evasion.

Standards of conduct will be established between persons giving tax advice and the Inland Revenue Department.

Taxation issues currently dealt with by the Serious Fraud Office will be transferred to a special unit with the Inland Revenue Department and/or the Police.

The Inland Revenue Department will be resourced adequately to investigate complex taxation criminality where it exists.

Fiscal Implications of this Policy Agreement:

Indeterminate, could be substantial additional revenue.

(All funding proposals subject to being considered within the agreed spending policy parameters.)

Legislative Implications of this Policy Agreement:

Possible amendments to tax legislation and the Serious Fraud Office Act 1990.