National trumpets return on prosecuting tax dodgers

Rotorua MP Todd McClay.

The Government has rubbished claims it is more interested in cracking down on benefit fraudsters than tax dodgers - trumpeting a return of up to $8 for every dollar invested in chasing tax cheats.

Speaking at the OECD Cash and Hidden Economy Conference today, Revenue Minister Todd McClay said exposing tax evasion in the 'hidden economy' last year gave a return of $45 million - equating to $5.60 for every dollar spent.

"For non-compliance through property speculation, $53.8 million worth of discrepancies were found, a return of $8.42 for every dollar invested."

When the initiative was announced in 2010, Finance Minister Bill English said the Government hoped to recoup $5 for every $1 invested in the scheme.

Mr McClay today said the Government had invested heavily in the initiative and was starting to see results.

In Budget 2010, $120 million was allocated for exposing tax non-compliance and another $78.4 million was tagged in Budget 2012.

"Our opponents claim that we are obsessed with welfare fraud while do nothing about tax dodging, however, this couldn't be further from the truth," Mr McClay said.

"Spending on Welfare Fraud has remained at exactly the same level as it was under the last Government, around $35 million a year, yet the management of debt and outstanding returns by IRD has gone up from $88 million to $125 million in Budget 2013."

Overall last year, Inland Revenue collected around $4 billion worth of debt and outstanding returns, Mr McClay said.

He encouraged those struggling to meet their tax obligations to contact Inland Revenue and work out a repayment plan.

"It is easier for taxpayers if they comply on time than have Inland Revenue chase them up later."

Labour and the Greens have previously criticised the Government saying too much time was spent "beneficiary bashing" instead of focusing on tax cheats.