Courts tougher on benefit fraud than tax dodging – study
Sunday 21 Oct 2012 6:05 p.m.
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.