IRD plans to deal with taxpayers over internet

Taxpayers' business with the Inland Revenue Department will be mainly done online within two years.

The switch from letters will deliver "substantial" savings but may also cost jobs and raise privacy issues.

Revenue Minister Peter Dunne yesterday said the Government was seeking public feedback on proposed "major" changes "to simplify the tax system and make it easier for people to manage their tax affairs".

Proposals include allowing people to "self-manage" most of their tax and social assistance entitlements such as Working for Families using a secure area on the IRD's website in a process akin to internet banking.

"What we are looking at is a much more electronic interface for the future of the operation of the tax system."

The IRD, which is reviewing its information technology system, wanted to streamline its operation from the current "heavy paper-based system", Mr Dunne said.

The final shape and scale of the changes and therefore the savings would not be clear until public feedback was considered.

"We don't have firm figures at this stage other than they will be substantial."

Mr Dunne acknowledged that job losses were likely at the department, which employs 6000 staff in 17 cities and towns.

"A number of the current roles may not be needed but there may well be other roles that can be picked up. What we've got to balance are the gains that can be made from moving to this type of system against obviously some of the social impacts and that's going to be quite a delicate consideration."

The IRD and Mr Dunne were also in discussions with the Government and other agencies including the Privacy Commissioner about what the proposals meant for individuals' privacy.

While the IRD's customer interface was likely to incorporate security measures used in internet banking which the public were largely comfortable with, a wider issue was the extent to which information gathered by the IRD and other departments was shared between them.

Mr Dunne said the IRD's initiative would have implications across government "and it's important we have that discussion now".

He said the public was probably "more receptive to the concept of going through a single doorway" when dealing with different government departments - such as the IRD, Ministry of Social Development and the Accident Compensation Corporation - than they had been. Improved safeguards could be introduced.

In keeping with its vision of a digital future, IRD will primarily conduct its public consultation online at www.ird.govt.nz/makingtaxeasier

Consultation runs until July 23 and Mr Dunne hopes the new regime will begin on April 1, 2012.

MAKING TAX EASIER

* The IRD wants to reduce its use of paper and increase taxpayers' use of online services.
* The department now sends 100,000 letters each business day or 26 million a year.
* It also plans to reform the PAYE system so most taxpayers pay the correct amount each payday, ending tax rebates or bills at the end of the year.