Taxman's hand out for power windfall

By CHRIS DANIELS and BERNARD ORSMAN

Tax officials want to intercept 50,000 of the $570 Vector dividend cheques before they land in the letterboxes of Auckland's tax defaulters.

The Auckland Energy Consumer Trust is preparing to distribute $151 million to more than 260,000 homes in the Vector electricity lines area - Auckland, Manukau and Papakura.

But last week, Inland Revenue Department officials met Vector and the trust, asking for customer information so it could intercept the cheques of 50,000 people who owe tax money.

Under section 17 of the Inland Revenue Act, the IRD can demand the information, and can force the trust to send cheques straight to Government coffers.

The trust would then have to write to the tax defaulters, saying their cheques had gone to the IRD.

The money is dividends from 1998, 1999 and 2000 which were frozen during legal action by Auckland, Manukau and Papakura councils and can now be distributed through the trust, which owns Vector.

The trust's secretary, Auckland lawyer Tony Kermode, confirmed last night that the IRD had asked for the "provision of information to assist collecting any outstanding taxes due."

But it had not made a final decision on whether to go ahead with its swoop.

Mr Kermode said that Vector and the trust pointed out the difficulty of matching the correct names based on the information they had on the bills.

"We discussed the problems that this would cause to the distribution by the end of March.

"IRD said it would want at least two weeks to try to match names.

"Vector pointed out that the names people had on their electricity accounts weren't always the correct names.

"A J. Smith might be James or Jill or John. The retailers do not insist on the full and correct name on their accounts."

Mr Kermode said the IRD officials claimed most of the tax defaulters owed more than $500, so they would receive no Vector dividend at all.

IRD officials told Vector they had not made a decision about forcing it to provide the information, and might have to ask the Minister in charge of the IRD, Michael Cullen.

But a spokeswoman for Mr Cullen said his office had been told no ministerial approval was required.

The Herald contacted the IRD last night, but a spokesman said details could not be confirmed until today.

Tax specialist Stuart Hutchinson, of law firm Simpson Grierson, said the IRD had extensive powers to pursue outstanding debts and could intercept payments to a person who owed tax.

It was legally entitled to demand information, books or documents which were required for the collection of outstanding debts.

If the IRD plan goes ahead, the much-delayed dividend payment could be held up by at least another two weeks.

Last night, the Auckland City Council voted to drop court action appealing against a High Court decision approving the payout.



And today, the Auckland Energy Consumer Trust is expected to decide to distribute the dividend evenly to households and businesses in its area by the end of next month.

At a meeting this evening, the trust must also decide criteria and a cut-off date for who will qualify for the payment.

Meanwhile, it also emerged yesterday that four councillors - deputy mayor Dr Bruce Hucker, Kay McKelvie, Frank Ryan and Catherine Harland - who voted for continued court action against Vector each received the same photocopy of a handwritten letter threatening to kill them. Part of the threat was to firebomb their cars and homes.

Auckland City Council chief executive Bryan Taylor said the threats were being treated seriously and had been referred to the police.