2. Reduce the Partially met Partially met Not met This option would rate of the likely have a incremental late While the incremental late payment Taxpayers will continue to Unpaid and potentially negative revenue payment penalty rate is reduced, the incur significant stress and uncollectible incremental impact, lower than penalty. combined penalty and interest rate anxiety in attempting to late payment penalties the recommended may be too high to effectively resolve their tax debt, due to will continue be added to option. encourage significantly indebted the continued imposition of the debt book, though taxpayers to engage with Inland penalties on their tax debt this will be less than the Revenue. long after it is due. status quo. Lacks fairness as Inland Revenue Inland Revenue likely continues to impose a high have a small reduction in its combined rate, while expecting the administration and taxpayer to be motivated to repay enforcement costs their tax debt. (compared to the status quo), due to the smaller Taxpayers will continue to have a incremental late payment financial incentive to into an penalties being added to the instalment arrangement. tax debt book. 3. Remove the Partially met Met Met The total cost over 1% incremental four years is $87 late payment Maintains fairness between Keeping the tax debt at a Less uncollectible million. penalty compliant and non-compliant more manageable level for penalties are added to the taxpayers, as taxpayers will longer will allow taxpayers debt book. The value of continue to have an incentive to pay more opportunity to resolve the debt book will more their tax liability by the due date or their tax debt, reducing their fairly reflect what is shortly after. stress and anxiety. collectible, giving more certainty to government While some taxpayers will no Inland Revenue’s about its value. longer receive a financial incentive administration and to enter into an instalment enforcement costs will arrangement, they will continue to reduce as less uncollectible receive certainty that Inland
2. Reduce the rate of the incremental late payment penalty. Partially met While the incremental late payment penalty rate is reduced, the combined penalty and interest rate may be too high to effectively encourage significantly indebted taxpayers to engage with Inland Revenue. Lacks fairness as Inland Revenue continues to impose a high combined rate, while expecting the taxpayer to be motivated to repay their tax debt. Taxpayers will continue to have a financial incentive to into an instalment arrangement. Partially met Taxpayers will continue to incur significant stress and anxiety in attempting to resolve their tax debt, due to the continued imposition of penalties on their tax debt long after it is due. Inland Revenue likely have a small reduction in its administration and enforcement costs (compared to the status quo), due to the smaller incremental late payment penalties being added to the tax debt book. Not met Unpaid and potentially uncollectible incremental late payment penalties will continue be added to the debt book, though this will be less than the status quo. This option would likely have a negative revenue impact, lower than the recommended option. 3. Remove the 1% incremental late payment penalty Partially met Maintains fairness between compliant and non-compliant taxpayers, as taxpayers will continue to have an incentive to pay their tax liability by the due date or shortly after. While some taxpayers will no longer receive a financial incentive to enter into an instalment arrangement, they will continue to receive certainty that Inland Met Keeping the tax debt at a more manageable level for longer will allow taxpayers more opportunity to resolve their tax debt, reducing their stress and anxiety. Inland Revenue’s administration and enforcement costs will reduce as less uncollectible Met Less uncollectible penalties are added to the debt book. The value of the debt book will more fairly reflect what is collectible, giving more certainty to government about its value. The total cost over four years is $87 million.
2016-ris-bteirm-bill-4.docx