Editorial: Welfare fraud vs tax fraud

The Government and its enforcement agencies take a dim view of felons who rip off the taxpayer. But a few recent court cases suggest the disapproval is much greater for welfare cheats than tax dodgers.

Associate Social Development Minister Chester Borrows early this year said the vast majority of beneficiaries are honest and do the right thing.

But a small minority cheat the system and welfare fraud is a crime committed by criminals for their own benefit at taxpayer expense, "and we treat it as such without excuse". Mr Borrows proceeded to announce new measures to prevent, detect and catch the fraudsters.

A few weeks later, as Minister of Revenue, Peter Dunne published data from his department in an attempt to end "the bizarre fiction from Labour" that the Government was tough on welfare fraud, but soft on tax evasion.

The figures showed Inland Revenue closed 513 cases for $82.6 million in evaded taxes in the year to June 2012, and in the 12 months before that, 657 cases were resolved for $115.4m in undeclared taxes - a total of $198m. If the Government was being soft on tax evaders, "I will eat my hat," he said.

Blogger Malcolm Harbrow this week has noted the prison terms imposed on a Rotorua mother of four who netted $51,000 through benefit fraud (a year), a Napier woman found guilty of $167,000 of benefit fraud (two years and one month) and a Warea mother of two who wrongly took more than $80,000 in domestic purposes payments (one year).

"Benefit fraud is a national problem and a national disgrace," the judge in the latter case said.

In contrast, a former property developer and "serial tax cheat" who evaded paying $979,000 over more than 15 years was sentenced in Wellington to a year's home detention, 275 hours of community work and ordered to pay $25,000.

Mr Dunne said New Zealanders want fairness. They want beneficiaries to receive what they need when they need it, and they want people to pay their fair share of tax.

"This Government is clearly making that happen on both fronts," he said. Perhaps this is so when it comes to detecting fraud.

But the cases cited here suggest the outcomes are not so fair when the cheats are brought to book.