Revenue Minister’s Attempt to Skirt Proper Process a Constitutional Disgrace
22 AUGUST 2016
Revenue Minister Michael Woodhouse’s proposed amendment to the Tax Administration Act, allowing tax law to be changed by Order in Council, is a constitutional disgrace, says Jordan Williams, a former constitutional lawyer and current Executive Director of the Taxpayers Union. The concerns are backed by tax expert, and former head of policy at the Inland Revenue, Robin Oliver.
Mr Oliver says, "The proposed law change allows the government to suspend and overrule provisions of the Tax Administration Act. This sounds as if it is about forms and processes. But in fact, that Act sets out most taxpayers rights such as the right to secrecy and the right to have your arguments considered and dealt with fairly. It also imposes up to five years in prison for the criminal offence of evasion. It seems astonishing that Parliament would delegate to the government the ability to overrule and suspend such vital legislation. A more considered approach is called for."
Mr Williams says, “This power allows the Minister to change tax law without Parliamentary scrutiny and public consultation. Having proper scrutiny of tax law is of utmost constitutional importance. Not since the Electoral Finance Bill has New Zealand seen such constitutionally dangerous legislation introduced into Parliament by a government.”
“The IRD have said that this approach will avoid the ‘complex and time-consuming’ legislative process. This process is there for a reason – to prevent the executive from passing tax changes without proper Parliamentary scrutiny.”
“The IRD have also acknowledged that the change is a risk to separation of powers and fundamental common law principles. Of all the areas of law, tax rules should be certain and predictable, not subject to delegated power.”
"IRD's Regulatory Impact Statement even states that changes could be retrospective in effect and unfavourable to taxpayers. In other words, the proposed law would allow the Minister to retrospectively impose duties or remove taxpayers' rights."
“We are calling on the Minister to withdraw this SOP and ensure future tax changes go through the proper Parliamentary and public scrutiny,” says Mr Williams.
The SOP would allow the Minister to pass in
Orders of Council (including retrospective changes
• processes around information protection, record keeping and tax returns;
• secrecy rules;
• disputes procedures;
• assessment processes and rules;
• the processes for binding rulings and determinations;
• the rules around the charging of interest and penalties;
• the process for challenging a tax assessment; and
• the rules for recovering and transferring tax.
The SOP is available to view at: http://legislation.govt.nz/sop/government/2016/0190/latest/whole.html#DLM6922701
The relevant Regulatory Impact Statement is available at: http://taxpolicy.ird.govt.nz/sites/default/files/2016-ris-sop-190-bteirm-bill.pdf