The organisation said that while the bill was announced over a year ago, no consultation took place
The New Zealand Law Society (NZLS) has appeared before the Finance and Expenditure Select Committee to present its submission on the Taxation Principles and Reporting Bill.
Neil Russ, Convenor of the Tax Law Committee, was present before the committee to outline several significant issues with the bill, including the failure to follow the Generic Tax Policy Process (GTPP) and the truncated select committee process.
The GTPP, which has been in place since 1994, is a widely accepted process for developing tax policy. It emphasises early and informed consultation with the public and stakeholders. The NZLS raised concerns about the proposed bill's failure to return to the GTPP following the disruptions caused by the COVID-19 pandemic. The NZLS stressed that although the bill was announced over one year ago, virtually no consultation occurred throughout its development. The failure to follow GTPP has led to deficits in drafting the bill.
Alongside process concerns, the NZLS highlighted several substantive issues with the bill. Clause 8 of the bill currently limits the justiciability of the Commissioner's reports and the bill itself, potentially placing the Commissioner's powers and responsibilities beyond the reach of the courts. The NZLS stressed that this is particularly concerning, given the bill will enable the use of information-gathering powers for reporting. The NZLS recommended clarifying that this clause does not impede the right to seek judicial review.
The bill grants the Commissioner expanded information-gathering powers under the Tax Administration Act 1994. The NZLS called for limitations on when and how the Commissioner could exercise these powers, suggesting that the Commissioner be required to use information already held or information should be collected only in an aggregated and anonymised form.
The NZLS also raised concerns about the descriptors accompanying the tax principles, which are not articulated in objective or politically neutral language. They called for further public consultation on the principles and their descriptions. Additionally, the NZLS criticised the lack of certainty in the tax principles measurements contained in Clause 13 of the bill, highlighting the potential for changes and extending the scope of the bill without oversight or protection against politicisation.
Furthermore, the NZLS challenged Clause 14 of the bill, which allows the Commissioner to add to the tax principles measurements without consultation or oversight by parliament. Such changes are expressly stated not to be secondary legislation. The NZLS argued that this is an inappropriate delegation of law-making powers for a non-essential purpose that must be corrected.
While the NZLS supports transparency and improved tax literacy, it ultimately recommended that the bill not proceed due to the nature of the concerns raised.
