Strengthening the Settings for Inland Revenue’s Statutory Role as Tax Collector
Many public officials in New Zealand have statutory functions and powers that are assigned to them by law for which they are granted statutory independence. In a taxation context, the Commissioner of Inland Revenue (the Commissioner) is vested with significant powers under the Tax Administration Act 1994. The Commissioner is free to delegate these powers and is granted statutory independence regarding how these powers are exercised in respect of the tax affairs of individual taxpayers or tax law interpretation. These powers enable Inland Revenue (IR) to assess and collect taxes due to the Crown. Tax administration is an area that is extraordinarily challenging for IR. There are simply not enough administrative resources to assess and collect every dollar of tax revenue that is due. In addition, the legislation itself is necessarily complex and the meaning of the law is not always clear. A level of administrative discretion is needed to ensure a pragmatic approach can be taken to collecting the highest amount of tax revenue that is practicable. It is important, however, to ensure that the pursuit of tax revenue does not take advantage of administrative flexibility or ambiguity in the legislation by allowing the exercise of statutory functions and powers to be manoeuvred away from the legislator’s purposes for said functions and powers. This thesis establishes a series of expectations that taxpayers have of IR regarding how the independent statutory powers that are vested with the Commissioner should be exercised. With reference to this list of expectations, it then uses a combination of doctrinal and non-doctrinal research methods to conclude that more should be done to strengthen the settings for IR’s statutory role as tax collector. The research contends that the statutory settings are not appropriate to support IR in this role and a number of recommendations for legislative change are made. This thesis also makes a number of recommendations as to how IR can revise its internal approach to administering the tax system to reflect its statutory role as tax collector.
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