Options Fairness and equity Efficiency of compliance Sustainability of tax Revenue and administration system 1. Retain the Partially met Not met Not met No impact status quo Taxpayers in similar circumstances Continue to create High growth of penalties are treated in a similar way. compliance costs for leads to many taxpayers However, for some taxpayers, taxpayers having to pay becoming insolvent. imposing the financial penalty may significant financial Their continued be disproportionate to their penalties in order to repay leads to circumstances and may be viewed their tax debt in full. Inland Revenue taking as unfair. legal action. As a result Continue to create other taxpayers become Once the existing debt is compliance costs of stress negatively affected. significant, any additional financial and anxiety on taxpayers, penalty becomes ineffective at due to the high growth of Some taxpayers are motivating the taxpayer to actively their tax debt. incurring significant attempt to comply. penalties on tax Higher administration and debt, only for them to be It is unfair to repeatedly impose enforcement for Inland later written off, leading unreasonably high financial Revenue, to manage and to uncertainty about how penalties for the late payment of recover tax debt. many outstanding late tax. payment penalties are recoverable. The overall portion of financial penalties in the debt book that are unrecoverable will continue to increase.
Options Fairness and equity Efficiency of compliance and administration Sustainability of tax system Revenue 1. Retain the status quo Partially met Taxpayers in similar circumstances are treated in a similar way. However, for some taxpayers, imposing the financial penalty may be disproportionate to their circumstances and may be viewed as unfair. Once the existing debt is significant, any additional financial penalty becomes ineffective at motivating the taxpayer to actively attempt to comply. It is unfair to repeatedly impose unreasonably high financial penalties for the late payment of tax. Not met Continue to create compliance costs for taxpayers having to pay significant financial penalties in order to repay their tax debt in full. Continue to create compliance costs of stress and anxiety on taxpayers, due to the high growth of their tax debt. Higher administration and enforcement for Inland Revenue, to manage and recover tax debt. Not met High growth of penalties leads to many taxpayers becoming insolvent. Their continued leads to Inland Revenue taking legal action. As a result other taxpayers become negatively affected. Some taxpayers are incurring significant penalties on tax debt, only for them to be later written off, leading to uncertainty about how many outstanding late payment penalties are recoverable. The overall portion of financial penalties in the debt book that are unrecoverable will continue to increase. No impact
2016-ris-bteirm-bill-4.docx