Tax officials head out to check on red tape

By KEVIN TAYLOR

Senior tax officials will this month begin visiting businesses throughout the country to see first-hand the effect of tax red tape - but the plan has been criticised as unnecessary.

Thirty of the country's 250,000 small and medium-sized enterprises (SMEs) will be visited, all of them in provincial and rural areas.

The move follows a suggestion by Deputy Prime Minister Michael Cullen in August that bureaucrats be sent out to get a taste of the effect of red tape on SMEs.

His suggestion was incorporated into a Government consultation programme announced yesterday by Associate Revenue Minister Paul Swain to simplify the tax system.

Other parts of the consultation include:

* Fifteen focus groups run by an independent research company throughout the country.

* A telephone survey next month of more than 2000 SMEs and tax agents.

* A website survey form available from yesterday for businesses to complete.

The plan came under fire from Alasdair Thompson, chief executive of the Employers and Manufacturers Association northern branch, who said the Government already knew what the problems with tax red tape were, and it was time for action.

He thought businesses would be too busy to have much enthusiasm for IRD visits.

Thompson said the Government could start by axing the complex fringe benefit tax system.

"The business community is pretty cynical about the Government saying they are reducing business compliance costs," he said.

"We are not progressing with solving the problems."

However, Business NZ chief executive Simon Carlaw said small businesses should make the most of the chance to be heard by the tax collectors.

"I have no doubt that IRD officials will hear very clear messages about reducing the level of business tax and the case for abolishing fringe benefit tax, and that officials will have been told to turn their deaf ears to those complaints."

But, he said, IRD's current focus on practical ways to help small business grow was positive.

Swain said information from the consultation would feed into an Inland Revenue project on SMEs, and form the basis of a discussion document scheduled for release in the middle of next year.

The Government has already released two other important documents on tax issues within the past two years.

In May last year it produced "More time for business. Tax simplification for small business".

In July last year the extensive report of the ministerial panel for business compliance costs came out, with much to say about simplification of tax red tape.

Swain was adamant in launching the latest round of consultation at the Andrea Moore clothing firm in Wellington yesterday that changes would occur next year.

IRD Compliance Survey