Revenue minister in for taxing workload
The Labour-NZ First government will have to hit the ground running to achieve its priorities for tax and social welfare reform, comments from consultant Deloitte suggest.
Inland Revenue has been warning since 2011 it will have limited capacity to implement new policy initiatives until it replaces its First computer system.
It described First to former revenue minister Peter Dunne as being ‘‘like a house full of appliances connected to electricity by a cable full of intertwined wires’’.
But Deloitte’s national technical director for tax, Robyn Walker, said the Government’s ‘‘100-day plan’’ to introduce a families package and make changes to student loans and the minimum wage would all affect the social policy systems managed by the department.
‘‘The new Minister of Revenue Stuart Nash will be in for a busy time,’’ she said.
Inland Revenue aims to remove its reliance on First over the course of the next few years as a result of its $1.7 billion Business Transformation (BT) project, which aims to simplify the tax and welfare systems and do away with the need for 1500 staff.
The Treasury rated the BT project as being in a relatively healthy ‘‘green/amber’’ condition in a monitoring report in June.
But figures obtained from Inland Revenue by the Taxpayers Union last week show it struggled to handle calls from businesses following the first phase of the overhaul, which involved changes to the way businesses submit GST returns.
The data showed that, in May, Inland Revenue was unable to answer more than one in three calls to its contact centre about GST.
It was so swamped that it was unable even to put more than 10,000 calls on hold, and instead had to cut callers off without placing them in a queue.
Inland Revenue warned ministers in August that the second stage of the four-stage BT project would be ‘‘exponentially larger and more complex’’ and involved more risks, and that it was ‘‘tracking slightly behind schedule’’.
Walker said the BT project would require detailed oversight from the Government as well as new legislation.
The Government’s other commitments include establishing the Tax Working Group to consider tax changes that could apply after the next election, eliminating secondary tax, introducing tax incentives for research and development, and removing a tax loophole that applies to property speculators.
In addition to the BT project, work carried over from the previous government includes clamping down on multinational tax avoidance and changing the rules surrounding employee share schemes, she said.
Given the previous government had already banked extra income from multinationals in its forecasts for next year, it would be ‘‘imperative’’ for the new government to get legislation into Parliament ‘‘as soon as possible’’, she said.
Kiwi retailers are hopeful the Government may also force their foreign competitors to collect GST on all goods shipped to New Zealanders by the time Australia introduces a similar rule in July.
Walker said tax advisers expected to be inundated with reading material from the Tax Working Group next year.
‘‘It’s an ambitious project to get completed within three years,’’ she said.