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Budget 2012: Tax crackdown looms

The taxman is getting another $78.4 million over the next four years to help deal with the hidden economy, debt collection, and following up on unfiled returns.

The taxman is getting another $78.4 million over the next four years to help deal with the hidden economy, debt collection, and following up on unfiled returns.

In the 2010 budget, the government allocated an additional $119.3 million over four years for the department to strengthen its compliance and debt activities.

Revenue minister Peter Dunne said the return on that investment was encouraging, with an extra tax of $86.9 million assessed – representing a return of $6.62 for every dollar invested in the hidden economy and the property sector.

An additional $115.3 million of tax debt was recovered – a return of $9.50 for every dollar invested.

Dunne said the extra compliance activities in this budget are estimated to have a net positive impact of $345.4 million over the four years to 2015/16.

“The great majority of New Zealanders meet their tax obligations voluntarily,” Dunne said.

“However, when people do not pay their fair share, everyone else suffers because there is less money for health, education, and other essential services for our community."

Today’s announcements will target taxpayers who are offsetting holding costs on 'mixed-use' assets such as holiday homes, planes, and boats; livestock valuation rules; and the removal of a range of tax credits including the childcare and housekeeper tax credits the under $9,880 tax credit, and the tax credit for the active income of children.

Finance minister Bill English said the government wanted to broaden the tax base, close tax loopholes and improve the fairness of the tax system.