Courts tougher on benefit fraud than tax dodging – study

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Courts tougher on benefit fraud than tax dodging – study

3News NZ

Last year, tax evaders cheated the country of between $1 and $6 billion, while welfare fraud cost $39 million

Last year, tax evaders cheated the country of between $1 and $6 billion, while welfare fraud cost $39 million

By Susie Nordqvist

New research reveals tax dodgers are ripping off the country at up to 150 times the rate of welfare fraudsters, but are being jailed much less often.

So why are our courts showing more tolerance to tax evaders? One is not giving what you should; the other is taking what you shouldn't.

“Tax evasion, that's the deliberate act of not giving money to the Government that you should give to them,” says Dr Lisa Marriott at Victoria University. “And benefit fraud is the act of deliberately taking money from the Government you're not entitled to.”

Last year, tax evaders cheated the country of between $1 and $6 billion, while welfare fraud cost $39 million.

“The problem of tax evasion is at best case scenario 25 to 50 times the financial amount of welfare fraud, and at worst case scenario potentially 100 to 150 times the amount,” says Dr Marriott.

And the latest research from Victoria University suggests our courts are far from equal in their treatment of the two groups.

“For tax evaders, the average offending is about four times as much, but have about a third of the likelihood of receiving a custodial sentence.”

The numbers tell the story. For tax evaders, the average offending is $270,000, and those found guilty have only a 22 percent, or one-in-five chance, of being jailed.

For welfare fraudsters, the average offending is $70,000, and those found guilty have a 60 percent chance of being jailed.

So is it a case of our courts demonising the poor?

“It highlights the prejudices we have against beneficiaries and that we're judging them as different because of their work status,” says Sarah Thompson of Auckland Action Against Poverty.

A tax expert says the penalties are there.

“You can get fined significant amounts,” says Geof Nightingale of PricewaterhouseCoopers. “You can go to jail. You can have home detention or community service.”

It's how they're being applied that's the issue.

“I am a little surprised by that finding and somewhat concerned if there's any suggestion that tax evaders are treated more lightly than benefit fraudsters,” says Revenue Minister Peter Dunne. “I don't think that's fair.”

Mr Dunne says the Government has allocated almost $200 million to chasing tax evaders in the past couple of Budgets, with returns of more than $6 for every $1 they invest.

But some say people will continue to conceal their earnings until the courts start punishing tax evaders with the same severity they display with benefit fraudsters.

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Comments

16/04/2013 10:38:08 a.m.

Marie wrote:

What about my ex-husband on the winz benefit and also running a bussiness all multiple sources of incomes and profit under the table, run bussiness loss and claim his taxes back, gst back claim his loses of running his bussiness renta home at loss and also recieving acc for self employement related compensations, claim child support, accomodation supplments etc! what do you think of this, tax evasion, defrauding WINZ, IRD and ACC, and it seem he get away with this scotch free! I kept telling the department each time he take me to child support appeal and administrative review but no one listen to me, while here Im earning an honest living as a shift worker, pay tax, no one believeme at all! it is very frustrating!

21/02/2013 8:08:58 a.m.

Malcolm wrote:

How about holding the wives of all the finance fraudsters accountable they still live in their remuera manchants driving their BMw tractors after their husbunds ripped of millions.Where is the parity.

4/11/2012 8:34:16 p.m.

christine wrote:

Well said , Quinn Williams. Agreed. @ alistair, if its o.k that some "keep money you did earn (i.e. tax evasion)", as you put it, then tax evaders/avoiders should not expect any of the services that tax pays for, right?

27/10/2012 1:50:51 p.m.

David wrote:

@Allistair - you are legally obligated to pay the government a certain percentage of whatever money you earn or pay. That percentage belongs to the state, therefore, withholding it constitutes theft. And if you withhold your tax payments and make use of public services and provisions such as roads, then you are most definitely a thief!

27/10/2012 9:10:59 a.m.

Lysette wrote:

It's pretty simple, when the Government wanted government departments to be more efficient, it got what it demanded. Between Crown Law Office incompetence and career-protecting, and loss of key IRD staff, Dunne can give IRD all the money he wants, they will continue to be outplayed and outclassed by the private sector. IRD can't turn on its own people then expect to keep winning.

26/10/2012 2:58:41 p.m.

Peter Braithwaite wrote:

Tougher on benefit fraud but no body really cares about the companies that go into liquidation to avoid paying their creditors, this is practice Fraud and they know it.

26/10/2012 12:11:47 p.m.

Allistar wrote:

There's a big difference between taking money you did not earn (i.e. benefit fraud) and keeping money you did earn (i.e. tax evasion).

25/10/2012 3:20:27 p.m.

Mike wrote:

$39 million of benefit fruad identified so included in this article.

Someone reached up somewhere to come up with the $1-6 billin figure as their 'Quantative' measure.

How many billions in taxes were actually paid by these people/businesses claimed to have evaded taxes? Include GST, PAYE, and income tax of the enitities and their employees. That would be more balanced reporting so it wont happen.

This is like Labours claim the other year that Revenue=Profit, and on that basis claiming farmers who averaged paying around $1500 in income tax should have been paying tax of 28% on their turnover when they hadn't made much profit! Or claiming Farmers are really individuals, so should be taxed at the personal income tax rate not business rate and any business tax rate is evasion!

25/10/2012 1:25:48 a.m.

quinn williams wrote:

Heartening to see so many kiwis displaying a little common sense and looking up to see where the real crims, back hand buddies and inside traders are instead of beating on the poor minority and blaming them for all the worlds ills, as if they had any real power anyway....It's inspiring, maybe kiwis are finally starting to see through the regular tactics of the self interested hard right... or even the soft right, as labour has been for quite some time... The unhealthy idea that that the accumulation of wealth is some kind of sign of virtue in and of itself is surely largely to blame for the distortions in the justice system and in much of the mainstream political view...

23/10/2012 11:49:55 a.m.

MH wrote:

New Zealand Government corruption is rampant and needs to be spoken about and heard by the public more often and more consistently. Come on media, less intrusion into peoples private lives and more media coverage about accountability from the government.