Taxman’s lobbying secrecy slammed

The Inland Revenue Department hopes to keep the lobbying it received over a proposed clampdown on multinational tax avoidance secret until after the Government has decided what it will do.

The tax department has been criticised by Labour after deciding to keep secret 38 submissions it received in response to two public consultations that closed in April.

The Government is considering tightening the tax rules around transfer pricing, permanent establishment and interest charge deductions.

Finance Minister Steven Joyce forecast in the Budget that foreign multinational companies would pay at least an extra $100 million in tax in New Zealand each year as a result.

But Inland Revenue policy manager Carmel Peters indicated ministers might not be able to make decisions ‘‘in an orderly manner’’ if it released submissions on the proposals before final decisions were made.

A spokeswoman for Revenue Minister Judith Collins said the submissions would be released once the Government had decided what steps it would take, but that the decision not to release them beforehand was one for the department.

The Office of the Ombudsman said it would look into a complaint about the non-release of the submissions.

It pointed to a case note it issued in 2012 that concerned the Ministry of Social Development’s refusal to release submissions made in response to public consultations over policies relating to vulnerable children.

The ministry had also claimed that ‘‘premature disclosure’’ of submissions would prejudice the ability of ministers and officials to consider the submissions ‘‘in an effective and orderly manner’’.

But former chief ombudsman Dame Beverley Wakem said in the case note that ‘‘ombudsmen rejected the argument that premature release of public submissions would impede the subsequent development and consideration of policy advice by officials and ministers’’.

‘‘Disclosure of submissions cannot pre-empt or prejudice the ability to consider later advice that may in part be based on the submissions,’’ she said.

The Social Development Ministry backed down on that occasion.

"There are [international] requirements for New Zealand to demonstrate it has a real commitment to transparency. This is a test." Labour MP Clare Curran, above

The Labour Party’s open government spokeswoman, Clare Curran, criticised Inland Revenue. Submissions from public consultation processes should be made public unless there was a good reason to withhold them, she said.

Curran questioned whether failing to do so may breach international agreements.

‘‘We have signed up to an open government partnership agreement and there are requirements for New Zealand to demonstrate it has a real commitment to transparency. This is a test,’’ she said.

‘‘It could indicate that they don’t like the advice, but we live in a democracy. There is a trend for this government to withhold more and more information.’’

Labour revenue spokesman Michael Wood said there needed to be a good reason to withhold information. He said Inland Revenue had been praised for its openness regarding its massive Business Transformation project and there appeared to be a ‘‘level of inconsistency’’ within the department over its approach to transparency.

Inland Revenue has previously been criticised by Labour and academics for failing to exercise the powers it has under tax law to discuss the tax affairs of individual multinationals where there may be a risk to public confidence in the tax system.