Tax law by fiat!

The Taxpayers Union have rung warning bells:

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.”

Parliament should set the tax law, not orders-in-council.

“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.”

Ouch.

The SOP would allow the Minister to pass in Orders of Council (including retrospective changes to):
• 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.

Such changes may seem minor to the IRD but could have a huge impact on taxpayers.