WELLINGTON - Finance Minister Bill English is concerned that an inquiry into the Inland Revenue Department might erode taxpayer privacy.
Labour and Act have called for an inquiry into the department's penalty regime and the way it handles errant taxpayers.
Parliament's finance and expenditure committee will today discuss whether to hold an
inquiry, although it appears most MPs on the committee want one. The inquiry's terms of reference could also be agreed to at today's meeting.
The committee's deputy chairman, Peter Dunne, said he supported an inquiry if the right terms of reference were set to address the key areas of taxpayer issues and the integrity of the system.
Inland Revenue was accused last month of inappropriately hounding taxpayers. A Kapiti Coast woman said her husband's $85,000 tax bill contributed to his suicide, and tax agents said the department was using fear tactics and intimidating taxpayers.
Mr English said privacy provisions in the law were crucial to taxpayers' willingness to comply voluntarily with the law.
"The way in which the committee's inquiry deals with the issue of taxpayer privacy will impact on every New Zealander who pays tax," he said. "The committee needs to consider carefully how it would deal with individual taxpayers pleading their case.
"On the one hand, the committee needs to have all the information on each case so it can credibly judge the merits of the case. On the other hand, taxpayers are now protected in law against Inland Revenue publicly disclosing any of their details."
He hoped the committee would be able to find the balance between current political interest in tax issues and the long-term interests of the whole tax system.
Mr Dunne said neither the taxpayer, the Government nor the department would thank the committee if it carried out "a scattergun witch-hunt."
"I think we've got to conduct an inquiry that gets to the heart of the issue and makes some meaningful recommendations."
Act's finance spokesman, Rodney Hide, said secrecy provisions in tax legislation existed to protect taxpayers, not the department.
Successive ministers had used the secrecy provisions to avoid confronting the maladministration of the tax system, he said.
"We need an inquiry into the powers handed across to the IRD, the operation of the penalties regime, and the operating culture of the IRD. Bill English should concentrate on doing his job. He should let the [finance committee] get on and do theirs." - NZPA
