Could it be that the message is finally getting through? Inland Revenue's apology to an Auckland couple for its conduct during a 14-year dispute suggested that a culture change has begun. If so, it is not before time. Jan and Murray Willis are far from alone in telling a harrowing tale about their dealings with Inland Revenue. And already it is more than a year since a multiparty parliamentary committee told the department that heavy-handed and dictatorial methods must be stamped out.
If a lead were needed, the acting commissioner, John Perham, has provided it with his apology to the Willises and his agreement that they should be compensated for an ACC levy error which created an incorrect tax debt and ultimately cost them their business. Spreading a more compassionate approach throughout the department may not, however, be without its difficulties.
There have, indeed, been hints that the process will be resisted by those of ingrained habit. Was it symptomatic that, in the Willises' case, Mr Perham disputed many of the facts and continued to oppose compensation until the very day of his apology?
His change of heart came only after he had spent an hour talking to the couple. That discussion made it clear, he said, that he had not been fully informed about all aspects of the case by his staff. Does this suggest a continued lack of objectivity and professionalism by department officials? At best, their briefing of Mr Perham must have been selective; at worst, it seems an element of vindictiveness survives.
It is worth remembering also that the parliamentary select committee which heard Mr Perham's apology on Wednesday has seen fit to comment on Inland Revenue's resistance to change. In August, it criticised the department for its "contempt" in not providing information about restructuring. The committee chairman went so far as to suggest that Inland Revenue had ignored the multiparty report condemning its culture and operations.
Mr Perham, who became acting commissioner in May and will remain until a new commissioner is found, brings the independence of an outsider to his role. As such, he is well placed to balance the need for a gentler approach with the protection of the country's tax base and the requirement that all pay their fair share. Greater flexibility and an increased scrutiny of departmental officials will be essential if a new attitude is to be implanted.
It is apparent that some disputes have become personal vendettas. Officials, bent on recovering tax debt at virtually any cost, have used their considerable powers to bully and coerce. In the process, they have too often lost a grip on common sense. In the Willises' case, Mr Perham seems now to accept the couple's contention that a department official went so far as to tamper with an Inland Revenue letter, removing advice of the right of appeal.
And, most fundamentally of all, no one seems to have queried the point of effectively destroying the Willises' successful Auckland-based engineering business, an operation that employed up to 400 people. Certainly, it did not serve the interests of the country or those who worked there. Yet, in 1990, after four years of dispute, the Willises were given a day to pay a $100,000 tax bill or be wound up.
Obviously, all efforts need to be made to organise tax repayments so that the Inland Revenue's ultimate sanctions - bankruptcy and liquidation - are rarely invoked. Greater flexibility should also apply to the assessment of penalties. Officials would then have no excuse for an unrelentingly tough line. Likewise, a taxpayer's good record should be considered when penalties are assessed, and taxpayers who make genuine mistakes should not be punished.
There remains the issue of the compensation for the Willises. In this case, there is good cause for the independent assessor to impose a punitive penalty - on precisely the same basis as Inland Revenue imposes penalties above the sum owed for non-payment or overdue taxes. If taxpayers suffer in such a fashion, so should the department when it imposes the sort of intolerable burden that was placed on the Willises. And Inland Revenue's share of the payout - to be shared with ACC - should not be an impost on the taxpayer. It should come from its departmental budget. That done, it will be Inland Revenue's turn to feel the heat.
<i>Editorial:</i> Taxman ought to pay up and shut up
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