Tax loopholes worry M.P.

Press, 8 November 1980, Page 6

Tax loopholes worry M.P.

Parliamentary reporter : About $1.7 billion in tax is being lost to the Government. , annually evasion and tax avoidance and the amount is growling said the . .National member of ’Parliament tor yMajp*Watu, Mr M. E. C. Cox, yesterdayMr iCox, aa accountant eolleciton, was needed. Refund did not reach to the heart of the problem. «A lot ef my thne in tax avoidance, schemes, for, tty dfeotaf* ha eaid. "The growth inpeople looking

for loopholes in the law concerns me. It has been rapid in the last five • years.” The $1.7 billion annual tax loss was equivalent to one-fifth of the Gover- •; meat’s entitles total tax take; Mr Cox said. Ho had made the assessment by going down to "where ft was happening,” .•/•jihdit was happening across the board. Professional people were better off accepting a case of scotch than charging a $5OO fee; many small and middle-sized businesses were selling themselves to

the shelf’; doctors working 24-hours a day might . pocket fees for the day, ,T and not declare them; workmen might offer to do overtime for cash; beneficiaries might work for cash and not deciare it Mr Cox said he did not know what the best tax system might be, but it should move away from a compulsory tax on income : - to an expenditure tax, only paid when people bought items, and therefore voluntary. The Cook Island system of turnover tax • should be examined. This tied tax to one complete cycle of a service, a product a motel bed.. Value

added tax, basing tax oh the value added to a good or service by a form or individual, was in force through Western Europe. Purchase tax, based op. the wholesale price of an article and paid by the wholesaler, could be passed on as a cost to the retailer and customer. Standard tax, another form of expenditure tax, should be included in any study of major tax reform. Mr Cox was one of a group of members of Parliament who approached the Prime Minister (Mr Muldoon) during the leadership incident asking for policy changes which in- . cktdedtax reform.