Inland Revenue is expecting to make big savings with the provisional tax changes announced yesterday.
Business turning over under $5 million will from 2018 be able to turn heir own computer systems a sort of do-it-yourself tax office.
That will be a major reason for the loss of up to 1500 jobs in the IRD after 2018.
Under the proposed changes, business taxpayers will use their business accounting software to calculate their provisional tax every two months and file it to the IRD electronically along with the payment.
Currently the process is paper based.
The IRD is installing a new computers system estimated by Treasury to cost $1.77 million by the time it is fully functional in 2019.
But Treasury expects the system to pay for itself.
Last month, Treasury’s Review of Major Projects said: “From the 2018/19 financial year, significant savings are required to ensure that the programme remains sustainably funded within IR’s baseline.
“The level of operating savings will require significant changes to IR’s workforce, and is also contingent on meeting ambitious digital uptake targets.”
Earlier this year a Parliamentary Committee reported that the transformation programme will change the IRD’s business processes, policies, and customer services.
“It is progressing in four stages over ten years.” the committee said.
“The stages involve the enabling of secure digital services; streamlining of income and business tax processes; streamlining social policy delivery; and completing the transition of all taxes and social policies to the new platform.”
Yesterday was the announcement of the streamlining of the business tax proposals.
Changes to the way income tax might be paid have yet to be announced.
And in announcing the changes the Prime Minister also suggested that there may be more spending in this budget to be announced yet.
Speaking after his announcement of the provisional tax changes, he was asked if he was considering any changes to infrastructure funding or changes around infrastructure.
“There are obviously going to be other announcements – not necessarily in that area — but across a number of areas and we just need to release them in the fullness of time,” he said.
He was also enigmatic when he was asked whether the Government would make any changes to the $1 billion operating allowance for Budget 2016 reaffirmed in last December’s Budget Policy Statement.
I don’t want to comment on that,” was all he said, referring any other questions to the Minister of Finance.
Cabinet sources say that there will also be a big emphasis in this budget on social investment and on the kind of issues raised by the recent report on Child Youth and Family.
But Budget Day – May 26 – is still six weeks away.