Last month, Newsroom revealed that the bright-line test for taxing property speculators had a compliance rate of just two-thirds. But despite widespread tax cheating by wealthy property speculators, IRD isn't actually doing anything about the problem:
In spite of the bright-line test having an incredibly low compliance rate, Inland Revenue has no full-time staff chasing property investors who fail to pay what they owe.
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Nearly one in three eligible property investors fails to comply with the test and documents released to Newsroom under the Official Information Act show the compliance rate is worsening. A report given to Revenue Minister Stuart Nash in May estimated bright-line test compliance could be lower than 50 percent.
Despite this, the IRD has not, in the three years since the bright-line test was implemented, established a team for chasing non-compliance and recovery.
Information released under the OIA to Newsroom said the IRD did not have dedicated teams for bright-line recovery nor did it have a separate budget for bright-line recovery activity. Instead existing staff were used to track down people who had not filed a return for possible tax due under the bright-line test.
Instead, they're targeting overseas student loan borrowers. Which tells us everything we need to know about IRD and the government's priorities.
But its worth noting that student loan debt is just that: debt. Whereas failing to comply with the bright-line test is a serious crime. IRD's refusal to enforce the bright-line test undermines both government policy and the rule of law, while setting clear incentives encouraging further tax-cheating by property speculators. And that is not something we should tolerate.
