New Zealand Considers Tax Amnesty To Tackle Black Economy

by Mary Swire, Tax-News.com, Hong Kong

18 August 2004

The New Zealand government yesterday released a discussion document which sets out proposals for an industry-wide tax amnesty to tackle the country’s black economy.

“Tax evasion can become ingrained in an industry, which often puts operators who pay tax at a competitive disadvantage,” commented Associate Revenue Minister David Cunliffe.

Under the government’s plans, culprits would be offered a limited amnesty in exchange for repaying a certain number of years of the back-taxes they owe, and agreeing to comply fully with the law in the future.

According to the NZ authorities, the rationale behind the discussion document is that tax rules focusing solely on individuals may not deal most effectively with industry-wide evasion. Therefore, it has decided to come up with a more “innovative” approach to the issue.

“In the long run, it’s better to have tax evaders start to pay tax – and make a belated contribution to the public coffers - than to have them...make no contribution, either now or in the future,” argued Mr Cunliffe.

The consultation, dubbed 'Options for dealing with industry-wide tax evasion' closes on 1 October 2004. If given the go-ahead, the government intends to implement the system initially on a trial basis.

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