INTHEBLACK August 2022 - Magazine - Page 19
CLICK HERE
TO LISTEN
Public engagement is
encouraged at each
stage, with the goal
of early and frequent
consultation, as well as
improved transparency
and accountability.
The first is the strategic phase, which involves the
development of an economic strategy, a fiscal strategy
and a revenue strategy.
While no formal consultation processes are in place
for this phase, broad policy proposals may be publicised
through channels such as budget documentation.
The second is the tactical phase of the GTPP, during
which targeted consultation takes place with the private
sector and interested parties to identify the tax policy
issues that are important to them. This is so the
government can prioritise which tax policy issues will
be addressed over the next 18 months.
“Consultation on the development of the work
program, combined with published information about
the current work program, means that the public knows
what changes are being contemplated,” the IRD says.
In the third – operational – phase, formal detailed
consultation currently takes place during detailed
policy design.
On major reforms, consultation will often involve the
release of a government consultation document.
“Normally, about six weeks are allowed for
submissions, although sometimes this can take longer
or shorter depending on the circumstances,” the IRD
adds. “During the submission period, officials have
intensive face-to-face meetings with affected
taxpayers.”
The legislative phase is next, where the New Zealand
Government may either decide to start by taking into
account what has been learned from submissions or
asking for further consultation on specific issues before
selecting and appointing a relevant committee and
considering submissions from the public. The committee,
on advice from officials, may then recommend that
further changes be made in line with those submissions,
or recommend that submissions be declined.
Thereafter, the policy will enter the implementation
and review phase, at which point any remedial issues
are also identified and addressed.
Throughout each of these phases, there are
opportunities for public engagement.
IS THE GTPP WORKING?
There’s been strong support for the GTPP over time
from other countries, including Australia, although
a similar system is yet to be adopted elsewhere.
Tax policy advice in New Zealand is jointly provided
by the IRD and Treasury, but New Zealand is unique
internationally in having the tax policy function led
by the tax administrator (the IRD).
to this story as an
audiocast
“THE PURPOSE
OF INTERACTING
WITH THE PUBLIC
IS TO IMPROVE
CUSTOMER,
POLICY AND
REGULATORY
OUTCOMES AND
TO INFORM
STAKEHOLDERS
IN ADVANCE OF
REGULATORY
CHANGES.”
INTERNAL REVENUE
DEPARTMENT, NEW
ZEALAND
CLICK HERE
TO LISTEN
to CPA Australia’s
tax time podcast
series
CLICK HERE
TO ACCESS
New Zealand’s
Generic Tax
Policy Process
document
“A consequence of the GTPP is that it increases the
time it takes to develop and implement tax and social
policy,” the IRD says.
“The process also involves considerable time and
resources for both the private sector and policy officials.
However, most stakeholders believe the GTPP to be a
valuable and essential part of building and maintaining
a good tax system.”
However, Adrian Sawyer FCPA, professor of taxation
at the University of Canterbury Business School and
member of CPA Australia’s New Zealand Tax Committee,
highlights a major issue with the GTPP – using the
framework isn’t enshrined in New Zealand legislation.
Sawyer points out that there have been numerous
recent changes made to New Zealand tax laws, particularly
in relation to COVID-19, without any public consultation.
“Setting aside [the GTPP] can be done with relative
ease with no apparent direct consequences. The
instances of setting aside the GTPP provide strong
evidence for its enactment into statute, perhaps with a
special majority clause for its repeal,” Sawyer says.
“When a well-regarded policy process comes under
serious threat, undermining many years of trust that
have been underpinned by transparency and public
consultation, this should draw attention and warrant
investigation.”
The GTPP incorporates a number of exceptions for
when the New Zealand Government may be justified in
not using the framework. The IRD says these exceptions
“will be used sparingly”.
Exceptions include avoiding wider consultation for
revenue protection or anti-avoidance measures, for
measures included as part of the budget process, or
where secrecy obligations may prevent officials from
undertaking wider consultation.
In addition, the IRD says urgent government priorities
may sometimes require a more truncated policy
development process.
“In effect, there is no formal mechanism in place to
hold the government accountable should it fail to apply
its own stated policy approach,” Sawyer says.
“Prior instances of not following the GTPP provide
evidence that the outcome without using the GTPP is
suboptimal, leading to unnecessary remedial
amendments and costs for taxpayers.
“These developments suggest that the high regard
in which New Zealand’s tax policy development is held
internationally will wane, and the country will no longer
be held up as a model to be explored with potential for
wider adoption.”
intheblack.cpaaustralia.com.au August 2022 19