Tax crackdown bridges revenue loss from partial privatisation: Dunne
By Paul McBeth
June 20 (BusinessDesk) - The Inland Revenue Department's clampdown on tax avoidance and loopholes will bridge the gap left by the government's planned sell-down of its energy company holdings, according to Revenue Minister Peter Dunne.
Measures in last month's budget to tighten tax breaks for mixed use assets and livestock, along with giving IRD a longer leash to chase tax dodgers and a hike in petrol and tobacco excise, will net $1.73 billion over the next five years, Dunne told Parliament's finance and expenditure committee.
That's ample cover for the $94 million annual projected shortfall left by the government's plan to sell minority stakes in MightyRiverPower, Genesis Energy, Meridian Energy and Solid Energy, and should keep a lid on future tax hikes.
The measures are "returning significant amount of revenue to the New Zealand government over the next few years, all of which reduces the likelihood of there needing to be tax increases," Dunne said. "If Mr (Clayton) Cosgrove wants to talk about $100 million a year, by my calculation, $1.734 billion over five years is far in excess of that."
The Mixed Ownership Model Bill went through committee stage in Parliament yesterday and is expected to pass its third reading this week.
Committee chairman Todd McClay ruled out questions put to Dunne about his casting vote on the legislation enabling the partial privatisation programme, which is needed get the bill through the House, saying they were out of order.
When questioned whether he had taken any advice on the partially privatised state-owned enterprises engaging in tax minimising behaviour after the sell-down, Dunne said Inland Revenue will take the same approach
"Where those gaps have been identified, they’ve been closed. That will continue to be the policy," Dunne said. "Our focus is on getting in the revenue that is property due to us."
Dunne talked down the grimmer fiscal forecast put out by the Reserve Bank last week which projected the Crown won't return to surplus until 2017, two years after the Treasury's target, saying the budget numbers were only one month old.
When questioned about the Income Tax Act's definition of income, Dunne said it is being broadened though he couldn't be more specific, and said he hasn't discussed the prospect of introducing a capital gains tax with Finance Minister Bill English for about two years when it was raised by the Tax Working Group.