National Government ministers had not talked with the IRD about dealing with high levels of tax avoidance and staffing levels to police tax avoidance had fallen in recent years, the Green Party said, citing papers released under the Official Information Act. The government was choosing to ignore systemic income tax evasion and reward tax avoidance rather than enforce tax law, the Green Party said. “Instead of enforcing current tax law, the Government plans to actually reward tax evasion by reducing top levels of income tax,” Green Party Co-leader Russel Norman said. “I have news for John Key: Wealthy people who exploit tax loopholes to avoid paying tax at a fair rate will try to avoid paying tax at any rate. The best way to control tax avoidance is to police it, but this is a route this Government is not interested in taking,” he said. Staffing and budget trends at the Inland Revenue Department’s Assurance & Litigation units — the unit responsible for policing tax law — have actually been in decline, Norman said. As of January 2010, 1,549 staff worked in the Assurance & Litigation unit, down by 102 full-time equivalents from June 30, 2008. Its budget has remained virtually unchanged since 2005. The number of Small & Medium Enterprise audits had fallen dramatically from 44,484 audits in 2000 to 12,707 in 2009. “Enforcing tax law is one of the best ways to ensure the tax system is fair and resilient. If there is systematic avoidance, the Government is forced to raise additional taxes to make up for the shortfall, like GST, and cut essential services like health and education spending,” Norman said. “Aligning top levels of income tax with the company or trust rates this Budget will send the perverse message that, if you're wealthy and avoiding tax, we'll reward you by reducing your tax. "National plans to get tough on crime but is happy to turn their back on the crime of tax evasion." Your view? We welcome your thoughts and experiences below.
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