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Tax Compliance Cost Reduction Unlikely

NEWS RELEASE FROM BROOKERS

Tax Compliance Cost Reduction Unlikely

Proposed changes to reduce tax compliance costs for small businesses are unlikely to deliver any substantial savings, according to two Wellington tax experts.

Writing in the July issue of Taxation Today, Elizabeth Burrows and Ben West-Walker say that if the Government is serious about minimising compliance costs for SMEs, it needs to look at a fundamental departure from the way in which they are currently taxed.

The Government released its Discussion Document Reducing Tax Compliance Costs for Small and Medium-sized Enterprises in December 2007.

“The question now being asked by many taxpayers is whether the proposals in this document will actually deliver any substantial cost savings,” they say.

“In reality, the proposals in the Discussion Document appear to be a mere tinkering with the tax system, and their effect in reducing costs for SMEs is likely to be minimal.

“By our count there have been at least seven such discussion documents regarding reducing compliance costs (not just for SMEs) since 1997, and few substantive changes have emerged.”

Ms Burrows and Mr West-Walker that the Government needs to move away from implementing changes which are consistent with the current tax rules framework.

“It is hard to conclude that the proposed changes outlined by the Government have actually achieved their objective of making life that much simpler for SMEs, given the minimal savings which will be created,” they say.

“Until the Government is willing to accept that there needs to be a fundamental change from the way SMEs are taxed, we doubt that this objective will ever be met.”
Wellington, New Zealand, 4 July 2008

ENDS

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