Move to simplify tax procedures

Press, 19 December 1989, Page 2

Move to simplify tax procedures

by

PATTRICK SMELLIE

in Wellington

Standard tax penalties and streamlined procedures for the national superannuation surcharge are among reforms canvassed in the Government’s Con-sultative-Document on Tax Simplification/released yesterday; ■ The document Is the first of two being issued this week by the Minister of Finance, Mr Caygill. Today he will release a 500plus page discussion document on capital gains taxes. The tax simplification moves come in the wake of business community complaints that they have .been overloaded with tax reforms since 1984. The system has been increasingly criticised as too costly and difficult to comply with. “This is taxpayers’ big opportunity to help us make their life a little easier,” Mr Caygill said. Ironically, the paper also contains a section proposing further tightening of provisional tax rules, which it concedes would increase compliance costs.

“We’re looking to reduce the total operating cost of the tax system, without sacrificing revenue unduly,” said Mr Caygill. The document emphasises the trade-off between easier compliance and the loss of revenue the Government could face as a, result. \ In several ‘instances, simplification suggested for individual and small business taxpayers is offset against proposals for tougher regimes for big taxpayers. The document suggests tax systems cost taxpayers more to comply with than the authorities spend administering them. But it argues private taxpayers have a greater incentive to cut compliance costs than the Inland Revenue Department. “Inland Revenue has a number of incentives to minimise costs, biit the lack of a profit motive means that incentives tend to be lower to minimise administration costs. “Due to the private sector incentives to minimise costs,

some argue that we should not favour changes that decrease compliance costs, at the expense of an equal increase in administration costs,” the document says. Other issues raised by the document include: .......Finding ways to stop people discovering they, face a large tax bill because of overpayments of Family Support. • Raising the threshold of income above which people have to pay provisional tax from the present $3OOO. This would particularly assist elderly taxpayers who are often confused by the new provisional tax regime. • Bringing together payment dates for PAYE and GST payments, among others. • Ways to improve compliance with fringe benefits tax without shifting the tax on to employees. The chairman of the Tax Simplification Committee, Mr John Waugh, said the committee wanted submissions from the public.