Unpaid GST back to haunt National

Judy Kirk

National is coming under renewed attack over an unpaid GST debt to several broadcasters.

It is now almost 11 months since National confirmed an error in the way it spent its $900,000 allocation for television and radio advertising in last year's election campaign.

The mistake - which was put down to a "misunderstanding" between National and its advertising booking agency - meant the party did not add GST on to its expenditure.

As a result, National has a GST bill of $112,000 that it believes it cannot pay because it would knowingly breach its Broadcasting Act spending cap if it did.

Broadcasters that ran the party's advertisements last year - including TVNZ, TV3, Sky and Prime - have had to pay the GST to Inland Revenue.

The situation has left National wide open to attacks from Labour, which yesterday seized on every opportunity it could to call for the party to "pay it back".

National president Judy Kirk last night said the party wanted to pay, but legally it couldn't.

"The Broadcasting Act is quite clear," she said.

Asked if it was satisfactory that broadcasters were footing National's bill, Mrs Kirk said, "Absolutely not. But the law says we're intentionally breaking the law if we do [pay it]."

National would potentially face a fine of $100,000 if it did pay the goods and services tax.

There is concern within the party that the person judged to have broken the law could be the one who signed the cheque to pay the bill. That could potentially be the party's new general manager, who will be named today.

National could choose to take a risk and pay, given that police did not prosecute Labour over its election pledge card. But it instead appears to be pinning its hopes on getting a private member's bill - which would allow it to pay without breaking the law - drawn in the parliamentary ballot.

Leader Don Brash has tried to introduce the bill before, but New Zealand First, the Maori Party and the Greens blocked it.

The irony of National wanting to use legislation has not been lost on Finance Minister Michael Cullen, who noted the party had been vehemently opposed to legislation to validate election spending recently found to have been unlawful.

A spokesman for the owner of TV3, CanWest MediaWorks, yesterday said the company was still in talks to recover the $16,000 National owed.

"We've been talking for a long time," he said. "We've been patient up until now."

He said National was "anxious" to resolve the situation.

A Sky spokesman said the company was talking to National and he was confident of a positive outcome.

TVNZ is owed about $57,000, and said it had rejected taking legal action to get the money.