IRD Has Options To Reduce Compliance Costs
23 August 2004
IRD Has Plenty Of Options Available To Reduce Compliance Costs
Businesses overwhelmingly believe that Inland Revenue has done very little in the last two years to improve taxation regulatory processes or reduce the associated costs.
Of more than 350 responses to an Auckland Chamber of Commerce survey on a number of issues, 308 (88%) indicated that they had not seen any changes in GST, PAYE and other taxation regulatory processes that had resulted in less compliance.
The 10% of respondents who had noted improvements from IRD, welcomed the changes but said they were of little practical significance for reducing compliance costs.
processes acknowledged by business included:
- Postage paid envelopes – “whoopee, but at least its something”;
- No requirement for end of year IR12s;
- Online filing is faster and easier.
The survey also invited feedback on the
number one suggestion to IRD to reduce compliance costs.
More than 150 respondents took time to provide specific
suggestions, many of which canvassed similar themes
- Doing away with or simplifying FBT (eg, dispense with 2 rates), including the suggestion to allow full vehicle claims for SME owner-operators for one car per owner operator or shareholder employee;
- Making all GST liable on a payments basis only – this would eliminate time and/or costly mistakes;
- Amalgamate/ consolidate payment dates of GST, PAYE, FBT and make provisional tax more frequent. One suggestion was to align the payments regime with Australia’s system of just 4 payments a year for everything.
- Keep making things easier by enhancing online procedures.
Numerous respondents called for tax
reform aimed at simplification and consistency. Ideas
- Lowering company tax;
- Abolishing FBT
- Scraping PAYE and having an increased GST as a substitute.
- Reduce tax rates as an incentive to (i) encourage higher productivity; and, (ii) encourage reduced “underground” economy;
- Reduce burden on employers to collect student loans and welfare payments;
- Re-look at Holiday Act payments liability – “a pain in the neck to administer”;
- Adopt all recommendations of the McLeod Tax Committee report.
Commenting, Chamber CEO Michael Barnett said the survey had been undertaken to provide feedback to Government on what is plainly a major concern for many businesses.
“The survey result confirms that IRD’s taxation processes continue to be a critical compliance cost issue for many businesses.
“While I am surprised that so many businesses spent time to make positive suggestions on how the tax system could be simplified and improved, I am heartened by this. It could have been an opportunity to chastise IRD and Government, but instead the many constructive suggestions put forward reinforce the view that most businesses acknowledge the need for IRD’s role and want to work in partnership with it to achieve improvements.”