Government and pensioners at odds over taxes

Transcript

Cook Islands Grey Power says members are willing to be sent to jail to shame the government for making them pay taxes on their pensions.

But the Minister of Finance, Mark Brown, says the government is no longer involved with the issue, as it's now a personal matter between pensioners and the tax department.

Leilani Momoisea reports.

In 2013, the Cook Islands government for the first time began taxing about 260 Cook Islanders who receive the New Zealand pension.

It also ruled that pensioners should pay two years worth of tax arrears, but the debt was later forgiven by the government, and pensioners who did pay were refunded.

But Grey Power says members also don't want to pay back taxes owed from 2013.

Its president, Dennis Tunui, says members have been receiving threatening letters telling them to pay up, and while they have previously marched to protest, there will be no more marches.

"We decided to suffer the consequences. That is, face court appearances. The whole group are united. We will not march, we'll just wait for them to start taking us to court. We will do that, and then demand that we go to jail. We stand firm against paying back-tax."

Dennis Tunui says at first it was just an argument over back tax, but now there are up to 80 pensioners on Rarotonga who do not want to pay tax at all.

He says they are now waiting to be taken to court, and he hopes it's done before the 50th Anniversary celebrations.

"It's gonna be a headline, that pensioners are going to jail. That's what we want to do. To shame the government. We are strong with that."

But the Finance Minister, Mark Brown, says the government's involvement in the issue of back taxes was resolved a couple of budgets ago.

He says the government reimbursed close to US$280,000 dollars to the pensioners who had been paying back their taxes.

"And an agreement was reached that taxation would apply to New Zealand pensions from 2013 moving forward, and as far as we're concerned that matter has ended. I guess what's before the tax department now is individual cases that they are pursuing on tax payers who have either refused to pay their tax or have difficulty or grievances with the tax department. And that's really a personal matter between the tax department and the individuals concerned, nothing that the government should be getting involved in."

Mark Brown says the government is not considering changing the law.

"This is income that's paid by the New Zealand government to New Zealand pensioners. And the New Zealand government taxes the New Zealand pension. So I don't think they'd look favourably on the Cook Islands amending tax laws which make it more favourable for New Zealand pensioners collecting the pension in the Cook Islands, than the New Zealand pensioners collecting the pension in New Zealand."

But the MP for Aitutaki, Teina Bishop, says the country doesn't need more tax from the elderly, but to better allocate resources.

He says the elderly already pay enough through value added tax when they pay their phone and power bills and shop for goods.

He says as a matter of principle, he wants the Cook Islands to be declared tax free for all pensioners.

"For years, this country's elderly has always enjoyed a non tax pension, and now today the old people are encouraged to go an pick up their tax return paper. You know, a 95 year old, or 85 year old, we expect them to go and pick up their tax return papers and fill them? What a load of nonsense."

Mark Brown says those receiving the New Zealand pension receive the gross amount, and it's up to individuals to account for their tax.

He says the government recommends pensioners make arrangements with the tax department for automatic deductions each month, so they can avoid a large tax bill at the end of the financial year.