Need For Balance In Tax Collecting

Revenue Minister Bill English said today the Inland Revenue Department had to find the right balance between the need to collect taxes and the need to maintain the goodwill and confidence of taxpayers.

"Inland Revenue has a statutory obligation to collect tax. People don't like paying tax, but we need to be very clear that Inland Revenue is going to collect the tax that people owe. There's around $750 million of debt owed to the IRD and that is $750 million of services like health and education that we can't fund.

"However, there has got to be a balance between the need to collect tax and the need to maintain the goodwill and confidence of taxpayers. We don't want to see people pushed into the black market economy and looking to avoid taxes because that goodwill is being eroded.

"The issue is the relationship between Inland Revenue and the people who have not met their tax obligations and IRD has now set out to do a review of the way in which it works. I will also be spending some time with the Department over the next few weeks to understand how the tax penalty legislation works and how it goes about its job of collecting tax debts.

"There have been claims that an $84 debt escalated to $85,000 in six years, but this is impossible. Under the worst case scenario an $84 debt would be less than $1,000 after that time. I am anxious to dispel this claim because of the anxiety it would be causing taxpayers who believed it," said Mr English.