Budget 2018: Tax crackdown to raise $183 million in revenue in next four years

Businesses face another tax crackdown with Government announcing it will allocate $31.3 million of Budget funding to Inland Revenue in the next four year. Photo / Kenny Rodger

Businesses face another tax crackdown with Government announcing it will allocate $31.3 million of Budget funding to Inland Revenue in the next four years.

Revenue Minister Stuart Nash expects the crackdown will raise an additional $183m in revenue during that time.

"The Coalition Government is committed to being fiscally responsible. Creating more fairness in the tax system is a critical part of this," Nash said.

"Extra revenue from cracking down on those dodging their tax obligations, while levelling the playing field, will help the Government address significant under-resourcing of critical public services."

More than $23m of the $31.3m allocated for Inland Revenue resources will go towards ensuring company tax returns are filed, and $3m will go towards tax compliance.

Overall, Government estimates it will gain an additional $726m of tax revenue over the next four-years, including from its previously announced move to impose an "Amazon tax" on low value goods and to ring fence investors' tax losses on rentals.

"This Government's plan includes adequately funding health, education and housing, increasing police numbers, and lifting more children out of poverty.

"We are not changing tax rates. But we do need a tax system that is simple, balanced and fair – where people and businesses comply with their obligations, and where those in similar circumstances pay the same amount," Nash said.

"Our Tax Working Group is also tasked with making recommendations for a fairer and more balanced tax system."

The Tax Working Group will report back in early 2019.

EY New Zealand tax policy leader David Snell said reform was missing in action.

"The Government will need to make a substantial commitment to tax reform if enduring productivity improvements are to be delivered," Snell said.

"An efficient and equitable tax system is necessary for inclusive growth.

"Recent research by Inland Revenue and Victoria University estimate the average under-reporting of self-employed and contractual workers at 20 per cent on average - a finding which has been surprisingly little noted - the time is right to step up that spend," he said.

"A productive economy requires us all to pay our fair share."