BSA Decisions Ngā Whakatau a te Mana Whanonga Kaipāho

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Summary

A defaulting taxpayer said to have incurred a penalty of over $86,000 for non-payment of an $84.00 tax bill had subsequently committed suicide, according to an item on Holmes broadcast on 2 February 1999 between 7.00–7.30pm. In an item on 3 February the programme highlighted other cases where tax bills were said to have escalated to become huge debts. On 4 February Holmes reported that the Inland Revenue Department (IRD) had responded to a previous programme by admitting it was in the wrong in its treatment of a defaulting taxpayer featured on the first programme. A further statement from the IRD read out in the programme on 5 February summarised some previously unreported facts relating to one of the cases referred to in the 3 February item.

The IRD, through the Commissioner, complained to Television New Zealand Ltd, the broadcaster, that the programmes contained information which was factually incorrect; did not deal fairly with the Department or with the Commissioner; lacked balance and impartiality; were designed to cause unnecessary alarm in the community; and failed to respect the principle of taxation laws in New Zealand.

TVNZ responded that the issues raised were demonstrably matters of public interest, and maintained that the investigation into matters relating to the IRD was justified. It reported an unprecedented response from viewers via faxes and telephone calls which signalled an unusual level of interest in the operation of the IRD. It considered its investigation was further justified when it was announced subsequently that the government had launched a full inquiry into the IRD’s operations and culture. With respect to the complaints that the items lacked balance, TVNZ referred to s.4(1)(d) of the Broadcasting Act which provides that balance is achieved if the issues are dealt with either in the same programme or in other programmes within the period of current interest. TVNZ maintained that the programmes contained no inaccuracies, and that the issues were presented impartially and objectively. It declined to uphold any aspect of the complaints.

Dissatisfied with TVNZ’s decision, the IRD referred the complaints to the Broadcasting Standards Authority under s.8(1)(a) of the Broadcasting Act 1989.

For the reasons given below, the Authority upholds aspects of the complaints that standards G4 and G6 of the Television Code of Broadcasting Practice were breached.

Decision

The members of the Authority have read transcripts and viewed the items complained about and have read the correspondence which is listed in the Appendix. It records that the IRD sought to have the complaints dealt with at a formal hearing. The Authority has considered that request, but having regard to the comprehensive written submissions received from both parties, it has decided that it is not necessary for it to convene a hearing.

The Standards

The Commissioner, on behalf of the IRD, complained that the items breached section 4(1)(b) and (d) of the Broadcasting Act and standards G1, G4, G5, G6, G7, G14, G16 and G21 of the Television Code of Broadcasting Practice. The statute provides:

4 (1) Every broadcaster is responsible for maintaining in its programmes and their presentation standards which are consistent with –

...

(b)   The maintenance of law and order

…

(d) The principle that when controversial issues of public importance are discussed, reasonable efforts are made, or reasonable opportunities are given, to present significant points of view either in the same programme or in other programmes within the period of current interest.

Standards G1, G4, G5, G6 and G7 require broadcasters:

G1  To be truthful and accurate on points of fact.

G4  To deal justly and fairly with any person taking part or referred to in any programme.

G5  To respect the principles of law which sustain our society.

G6  To show balance, impartiality and fairness in dealing with political matters, current affairs and all questions of a controversial nature.

G7  To avoid the use of any deceptive programme practice in the presentation of programmes which takes advantage of the confidence viewers have in the integrity of broadcasting.

The other standards read:

G14  News must be presented accurately, objectively and impartially.

G16  News should not be presented in such a way as to cause unnecessary panic, alarm or distress.

G21  Significant errors of fact should be corrected at the earliest opportunity.

Four complaints were received relating to programmes screened on Holmes on four consecutive nights from 2–6 February 1999.

Complaint – 2 February Programme

The item reported that a defaulting taxpayer who underpaid his tax by $84.00 in 1989 had, within a few years, incurred a tax debt of $86,000.00 with penalties and interest. The debt was said to have driven him to suicide. Eight months later his young son also committed suicide, reportedly as a reaction to his father’s death. The man’s widow recounted how her family had been destroyed as a consequence of the debt.

In the second half of the programme two tax accountants, one of whom had been involved with the case, were interviewed. One of them expressed the view that the IRD had not exercised its discretion as widely as it could have in dealing with the defaulting taxpayer, and that this had led to the tragic outcome. The Commissioner of the IRD was then asked to respond to what the presenter called a strong indictment of the IRD’s conduct in this case. Expressing his sympathy to the family and explaining that he was legally constrained from reporting directly on the facts of the case, the Commissioner advised that the IRD was putting extra effort into communicating the compliance and penalty regime to the community. He refused to comment on the management of the specific case. However, he did say in the interview: "I think it goes without saying that something isn’t right with this case."

The programme returned to the debate with the two tax accountants, one of whom stated that the IRD was not consistent in its dealings with taxpayers in default, and that outcomes depended on the individual case managers. He recommended that a tax ombudsman’s office be established to whom serious cases of default could be referred. In his final comments, the Commissioner gave an assurance that the IRD was giving thought to reviewing its practices regarding recovering tax debts.

The IRD complained about the following matters:

The presenter stated: "By the time the Inland Revenue finished pursuing him over half a decade, Ian had killed himself. A few months later, his young son, broken-hearted at the loss of his Dad, took his life as well."

The IRD complained that the statement implied that it had harassed a man to death and led to his son committing suicide. That, it contended, breached s.4(1)(b) of the Broadcasting Act 1989 and standards G1, G4, G5, G6 and G14 of the Television Code of Broadcasting Practice.

The IRD referred to the last note left by the man before he died, in which he had concluded: "I got off this planet because I hated it. Signed, a very happy person…".

While it acknowledged that the note had expressed strong displeasure with the IRD, it maintained it was unreasonable to conclude that the Department’s actions were the sole or main reason why the man had elected to take his life. It also argued that there had been little effort made to point out that tax debts were imposed by legislation and not by the IRD, which was charged with quantifying and collecting the tax owed.

The presenter stated: "Now this started with a minor under-payment of tax back in 1989 - $84.00. This escalated, within a few years, to over $86,000."

This statement, the IRD contended, breached s.4(1)(b) and s.4(1)(d) of the Act and Standards G1, G4, G5, G6, G7, G14, G16 and G21.

The IRD pointed out that under the penalty regime which applied at the time, an income tax debt of $84.00 could have grown to only $263.63 after six years. It claimed that the man’s widow had explained in the course of the interview that there was a further $20,000 of unpaid taxes which contributed to the debt. However, it wrote, that fact was omitted during the introduction and in the "remainder of this and the following programmes."

By drawing insufficient attention to this "significant fact", the IRD wrote that viewers were left with the impression that the substantial debt accrued only from underpaid tax of $84.00. That, it contended, was patently incorrect.

Prior to being interviewed, the Commissioner advised that he had made clear that he was unable to discuss specific details of the case. Yet, he observed, the presenter attempted to draw him into discussion about the case. In addition, he advised that he had requested a copy of the pre-recorded interview with the man’s widow. When that was not available, he was assured he would be able to watch the interview as it was being broadcast. However, he reported, "technical problems" prevented him from seeing that interview. He communicated his concerns to Holmes staff, but no efforts were made to remedy the situation, he wrote. In his view, his ability to respond was severely restricted as he had neither seen nor heard the interview with the man’s widow. He argued that in the knowledge that he could not discuss the particulars of the case and secondly that he had neither seen or heard the interview, the onus rested with Holmes to ensure the facts were presented accurately, fairly and in a balanced manner.

The presenter stated: "No matter how much he pleaded, the Revenue would not listen."

The IRD maintained this was factually incorrect and breached s.4(1)(b) and (d) of the Broadcasting Act and standards G1, G4, G5, G6, G7, G14, G16 and G21 of the Television Code of Broadcasting Practice.

The IRD pointed out that it had met with the man numerous times and had corresponded with him. It contended that the statement was an unfair and biased description of the IRD’s actions which furthered the negative portrayal of the Department.

TVNZ’s Response to the Formal Complaint

In assessing the complaint, TVNZ began with general comments about the series of programmes before turning to the specifics of each one. It argued that it was necessary for it to answer two significant questions, the first being whether the series was in the public interest, and the second whether it left an overall impression with viewers which was fair, accurate, balanced and impartial.

TVNZ argued that the issues raised were demonstrably in the public interest, noting that the IRD was an immensely powerful organisation whose activities impinged on the lives of most New Zealanders. In its view, there were valid reasons for Holmes to conduct its investigation into the Department. It reported that there had been an unprecedented response from viewers in the form of telephone calls and faxes after the broadcast of the series, which signalled an unusual level of interest among the New Zealand public. It considered the government’s subsequent decision to launch a full inquiry into the IRD seemed to vindicate its view that the matter was in the public interest.

With respect to the second question, TVNZ pointed to s.4(1)(d) of the Broadcasting Act which provides that the requirements for balance are met when significant points of view are presented "within the period of current interest". It argued that the period of current interest extended beyond the four broadcasts cited in the complaint, and included a broadcast on 3 March.

As a final introductory point, TVNZ observed that the programmes were not intended to be seen as an attack on the Commissioner himself, or on his office, but were concerned with departmental attitudes and culture.

2 February Programme

TVNZ did not agree that the programme gave a negative picture of the Department. It noted that the tax experts explained that it usually exercised its discretion properly and that only 5% of cases gave rise to concern. As for the complaint from the Commissioner that he was cut short when he attempted to make his contribution, TVNZ observed that two thirds of the programme comprised a discussion between him and two tax experts with the presenter acting as facilitator in the debate. It did not accept that the Commissioner was disadvantaged in the discussion, or prevented from expressing his views.

i) On the matter of the suicide note, TVNZ recorded its full text, which it maintained could not be read any other way than to imply that the featured man’s experience with the IRD was the predominant reason he gave as to why he had killed himself. It acknowledged that there were other problems in the man’s life at the time, and the break up of his marriage was referred to by his widow. However, TVNZ argued, the suicide note seemed to make clear that he had a preoccupation with the IRD when he chose to take his life.

To the argument that the programme failed to refer to the fact that the collection of taxes was required by law, TVNZ responded that it had not questioned the legislative authority to collect taxes. The programme, it said:

… questioned what appeared to be the sometimes inflexible position taken by the department over penalties and interest, even though it has the discretion for movement in this area. Any dispassionate assessment of [the man’s] experience must conclude that the department was uncompromising in its dealings with him. The programme quite properly asked whether this was fair, or an appropriate way for the department to act.

TVNZ argued that the programme was not about the need for taxes, but was about the manner in which the IRD exercised its power to collect them. It said it had questioned what appeared to be a sometimes inflexible position taken by the IRD over penalties and interest, although it had discretion for compromise in this area.

ii) TVNZ rejected the complaint that the programme implied that the man’s debt had ballooned from $84.00 to $86,000 solely because of the underpayment, stating that it did not believe viewers would have reached such a conclusion. Further, it cited a number of references in the programme which indicated that the final bill was a consequence of the man’s not being able to pay his tax for a number of years, and of business problems, including paying for repairs when he crashed his van.

However, TVNZ argued, even if a viewer had been left with the impression that the bill arose from a single underpayment, subsequent programmes would have made it clear how penalties and interest rates accrued and "in the process showed that the debt of $84 with which [the man] started could not possibly have reached $86,000 by itself."

On the question of how the Commissioner had been treated when interviewed on the programme, TVNZ responded that having gone back over the events of that week, it was convinced that he had been fairly and justly treated. TVNZ acknowledged that it had been intended to make it clear before the Commissioner spoke that he was not able to address the specifics of the case. However at the time, that matter had been overlooked – "a simple moment of forgetfulness on the part of the presenter". Nevertheless, TVNZ continued, it was made clear to viewers by the Commissioner himself that he was unable to talk about the specifics of the case. Further, TVNZ added, it had been explained to the Commissioner that the presenter would have to be seen asking questions about the dead man. This was so that the Commissioner could be seen to have the opportunity to respond, and to explain the constraints which prohibited his doing so.

With respect to the complaint that the Commissioner was hampered in his response because he had not seen the interview with the man’s widow, TVNZ acknowledged that there had been a problem with the audio link which meant he had missed part of the interview. However, it added, it had not been a deliberate act of obstruction. Next, TVNZ asserted that the Commissioner had had sufficient time to be briefed on the specifics of the case, having been notified 36 hours in advance of the programme. It added that as far as it was aware, the only information not known to the Commissioner was the matter of the suicide of the man’s son. However, it said he had been informed of that fact by the producer before the broadcast. TVNZ concluded that the Commissioner was already sufficiently aware of the details of the case to participate in the programme, as he had signed Departmental correspondence with the dead man’s family.

iii) Next, TVNZ dealt with the complaint that it was unfair to say that the IRD had not listened to the man when in fact it had met with him "numerous times". TVNZ said it did not believe the two positions were irreconcilable. It pointed out that it was not claimed that there had been no correspondence or meetings between the man and the IRD. What it had said was that the Department would not listen. It noted that the item made clear there were many discussions between it and the man. However, it suggested, it was reasonable to assume that those talks had not resulted in any resolution of the tax problem. Therefore, it concluded, the programme’s account was both accurate and fair.

The Referral to the Authority

Commenting on the series overall, the IRD acknowledged that the manner in which it carried out its statutory functions was one of public interest and that the freedom of the press to investigate and publicise such issues was a hallmark of democracy. However, it argued, with such freedom came responsibility. In its view, the damage caused by the programmes to public perceptions of the Department and its staff had been significant. It argued that the ends could not be held to justify the means, given that the programmes fell short of the required standards.

2 February Programme

i) The IRD acknowledged that the man who had been driven to suicide had tax debts and was clearly unhappy with the IRD at the time of his death. However, it objected to the programme’s portrayal of the Department as uncompromising, and of the man’s approaches to the IRD as being to no avail. This, the IRD argued, was a "patently inaccurate" account of events. It noted that no effort had been made to explain how the man’s debts had arisen over the years, or that it was usual for the IRD to consider various options to assist taxpayers in dealing with such debts.

The IRD objected to the programme’s unquestioning acceptance of the perspective of the man’s family and "at the expense of providing the public with an accurate account of [his] tax history."

ii) The IRD repeated its complaint that the programme misled viewers into believing that an $84.00 tax debt grew to $86,000 in a few years. It quoted extracts from news reports in other media the following day which, it said, were based on that erroneous impression.

The IRD rejected TVNZ’s argument that even if viewers were misled after the first programme, subsequent programmes clarified the matter. It noted that when the presenter acknowledged that viewers were seeking to understand how $84.00 had escalated to $86,000 he had said "So let’s forget about the specifics of [this] case for a minute" and then explained what would happen to $1000 of unpaid tax. However, the IRD complained, having said that he would leave the specifics of the case "for a minute", he made no attempt to return to it to explain and correct the "inaccuracies which a number of viewers had queried."

As for the treatment of the Commissioner, and the technical failure which prevented him from seeing the interview with the man’s widow, the IRD repeated its complaint that it was manifestly unfair to expect him to respond when he did not know the specific facts of the case. It wrote:

Against a background of statutory secrecy obligations the Commissioner, through a series of events attributable to TVNZ, was placed in a situation of not having a "reasonable opportunity" to present an informed point of view for the purposes of correcting the serious inaccuracies which had been broadcast.

iii) There was no evidence, the IRD contended, to show that TVNZ had taken reasonable steps to satisfy itself that the Department had failed to help the man deal with his tax problems. It noted that there was a long history of the man’s dealing with the Department, and argued that TVNZ should have formally requested evidence of that.

TVNZ’s Response to the Authority

Beginning with general remarks about the series, TVNZ responded first to the argument that the matter was in the public interest. It maintained that the overriding issue was that the expression of opinions, and the right of the viewing public to hear such opinions, was fundamental to a democratic society. It defended its right to probe the workings of any government department, particularly one as powerful as the IRD, and to raise issues for debate. Noting that the suicide case had been the springboard for debate, TVNZ observed that the Commissioner, two tax experts, the Minister and an MP had all had the opportunity to express their views over the course of the four programmes.

TVNZ objected to the allegations that the programmes contained "so many inaccuracies" and that they had fallen "outside the boundaries (of) reasonableness and fairness", arguing that the alleged inaccuracies – if there were any, and which it did not concede – were relatively minor in the context of the bigger issues explored by the programmes. Broadly, it said, the allegations of unfairness and inaccuracy came down to the following:

Not enough explanation as to the increase of core tax from $84 to $86,000;

No explanation about the faxes read out on the programme;

No reference to instalment arrangements;

The actions against the woman featured on the 3 February programme were those of the Official Assignee and not the IRD;

A sinister connotation had been put on the fax from the IRD;

The presenter’s reference to the IRD admitting that it was wrong in the treatment of the man who committed suicide;

The failure to broadcast the IRD’s statement in full.

TVNZ maintained that these points were relatively minor, and did not amount to inaccuracies which could be characterised as serious abuses of freedom of expression, as the IRD had contended. It argued that the complaint was an attempt to detract from very important issues raised in the programmes, and to deflect criticism of the Department. Its view was that the complaint failed to give credence to the average reasonable viewer to "read between the lines" and not have the obvious spelled out.

What must not be overlooked, TVNZ wrote, was that two tax experts in the first programme had made it clear that in the vast majority of cases the Department exercised its discretion properly. Secondly, it noted, the presenter in the second programme had put it to the tax experts that it was the job of the IRD to collect taxes and that in some cases that required drastic steps to be taken. Finally it observed that both the Commissioner and the Minister had had an opportunity to defend the Department over the course of the series.

2 February Programme

i) TVNZ noted the IRD’s acknowledgment that tax debts had contributed to the man’s suicide. However, it continued, the reporter had expressly referred to the payments on the debt being insufficient to overcome the mounting penalties and interest and later pointed to the fact that nearly half of what he owed in 1994 was in penalties. It maintained that it could therefore be assumed that the core income tax was accruing and, although the actual detail of the case was not referred to, viewers would have realised that there were other avenues for getting a taxpayer’s debt under control prior to the final step of bankruptcy.

As a further point, TVNZ observed that the two tax experts on the programme had expressed their opinions that it should have been plain to the IRD that the man could not afford the repayments, that it had not exercised its discretion properly, that it had a power to write off debt, that the case was not an isolated incident, and that they knew of other cases with similar tragic outcomes. The Commissioner, TVNZ continued, had had the opportunity to have the final say in the first programme, responding to the comments of the two tax experts.

ii) In TVNZ’s view, the reasonable viewer would not have been left with the impression that the debt of $84.00 had grown to $86,000.00 without core tax debt being added. It noted that at the beginning of the first programme, the reporter had emphasised that much of the debt was "present tax".

It also pointed out that it was acknowledged that the defaulting taxpayer may have had "other problems in [his]…life". However, it maintained, that was not the real issue. The real issue was that the man could not keep up with the repayments and it resulted in his suicide.

With respect to the interview with the Commissioner, TVNZ observed that he did not appear to have had any difficulty answering the questions put to him. It apologised for the technical failure which had occurred, but it did not agree that it resulted in any unfairness in the way the interview was conducted. In its view, the Commissioner could have responded in general terms by referring to what generally occurred in such situations.

The IRD advised that it did not wish to comment further.

The Authority’s Findings – 2 February Programme

The Authority’s observations on the series overall are contained in the conclusion below. It deals now with the complaints regarding the 2 February programme.

i) The first specific matter complained about was that it was implied that the man who committed suicide had done so in response to harassment from the IRD. While it is acknowledged by TVNZ in the correspondence that other factors, including the break up of the man’s marriage, contributed to his decision to end his life, the Authority considers there was sufficient material to implicate the IRD problem as a significant factor in the man’s suicide. Regardless of the methods used by the IRD to recover the tax and penalties owing, in the Authority’s view it is understandable that the burden of the tax debt could have seemed overwhelming to the man and that he could well have concluded there was no realistic likelihood of his ever paying it. Indeed, as the programme itself observed:

… through bad luck and bad management a simple man got into such a mess with the Inland Revenue that he could see no way out of it.

The Authority is reinforced in its view when it takes into account the full text of the man’s suicide note, which makes it clear that his anger was directed specifically at the IRD. The subsequent suicide of his young son was, the Authority concludes, a tragic consequential action triggered by the father’s death. That gave a sufficient basis for the broadcaster’s claims. The Authority is not prepared to uphold this aspect of the complaint, as it is clear the narrative reflects this family’s claimed experience with the IRD, and its belief that the tax debt was implicated in his death. While the suicide of the man’s young son was also mentioned on the programme, the Authority accepts that this was presented as no more than a tragic consequence of the father’s death. To the extent that it was claimed by the family that this too could be attributed to the IRD, then the programme accurately reflected the claims on behalf of the family.

ii) The second complaint about this programme related to the assertion that after six years an underpayment of $84.00 grew to a debt of $86,000.00. That, said the IRD, defied credibility. In response, TVNZ contended that viewers would not have been so na?ve as to have reached such a conclusion. It was made obvious, it argued, that the total amount comprised unpaid taxes as well as penalties and even had viewers been under the wrong impression, subsequent programmes would have clarified the point.

The Authority’s view is that there was potential for confusion on this point. It does not consider that the programme’s statement: "This was a combination of paying insufficient tax, and the mounting penalties and interest on top of it" sufficed to explain that the amount due comprised a significant amount of further tax owing, as well as the penalties and interest. In fact, it notes, it was not until a subsequent programme attempted to explain how unpaid tax debts escalated that it was made obvious that an $84.00 underpayment alone, even with penalties and interest, could not possibly grow to $86,000.00 in six years. For the above reasons, the Authority finds this aspect of the programme was in breach of standard G1.

(iii) The Authority next turns to the complaint that the Commissioner was treated unfairly because he was deprived of the opportunity to hear or see the interview with the man’s widow and brother on the programme, through the failure of an audio-visual link. The Authority acknowledges that the Commissioner had been advised of the general tenor of the family’s grievance with the IRD and that he had had an opportunity to obtain further information from his own staff on the case. However, it considers it was unsatisfactory that he was unable to hear the accusations made against him and the Department by the victim’s former wife and his brother which were broadcast in the first part of the programme. In the Authority’s view, the Commissioner was compromised in his response by not having heard their assessment of the facts, including the reference to the subsequent suicide of the man’s son. In the result, although told by the producers beforehand, the Commissioner was not fully aware of the extent of the information revealed, and thus he was not in a position to respond other than in general terms. The effect, the Authority concludes, was to exacerbate the already unfavourable impression of the Department and its staff. It finds this was unfair and in breach of standard G4. It accepts that the problem may have been a technical one. That was unfortunate. But given the highly emotive content of this part of the interview, fairness required that the Commissioner be privy to it.

iv) The final complaint relating to the first programme was that the IRD had been uncompromising, over zealous and relentless in pursuing the man to pay his tax and the penalties which had accrued. In spite of the absence of any explanation as to how the IRD applied its discretion when it sought to recover a large debt such as this from a taxpayer who apparently did not have the ability to pay, the Authority concludes that the programme did not unfairly portray the events which had occurred in this particular case. Indeed, it notes, there was an acknowledgment from the Commissioner that something about the case had not been right. The Authority is of the view that the programme’s investigation was justified, as was its focus on the Department’s treatment of individuals and the application of its policy on the remission provisions. It declines to uphold this aspect of the complaint.

Complaint – 3 February Programme

The presenter began by reporting that a large number of faxes had been received since the broadcast the previous evening. Some of those faxes were read out and echoed the experience of the family featured the previous evening. One man said that he had a bill of $763.00 which, three years later, had risen to $32,000 and he and his family were going to be forced to sell their home to pay the bill. Another said that his bill was about $300,000 and escalating at a rate of $25,000 per year. Yet another said his debt of $16,000 had ballooned to $84,000 and yet he only earned $34,000 a year.

The programme then focused on the plight of a Wellington woman who described how she and her family were visited by debt collectors who she said were there on behalf of the IRD, and who had come to do an asset test on their property. Two days later, she said, the family was told they had 24 hours to find $47,000. The woman said her husband had been made bankrupt by the IRD and she had to go to a "loan shark" to find the money to keep her home.

In the next segment, the two tax accountants who had appeared the previous evening returned to explain how the penalty regime worked. It was suggested that those most vulnerable to being penalised were self-employed small business owners who were possibly not well informed about the complexities of the tax system. According to one of the tax accountants the administration of the tax legislation needed to be reviewed to ensure that its provisions were being applied consistently throughout the country.

i) The IRD complained that the content of two of the faxes from aggrieved taxpayers which were read out on the programme were factually incorrect and misleading, particularly if they applied to debts under the pre-1997 penalty laws.

It contended that the initial amount of unpaid tax stated in each of the faxes was just a small part of the unpaid tax and the amounts now claimed to be owing were grossly incorrect. It complained that no attempt had been made to elicit the correct facts or to note that there was a discrepancy between the amounts alleged and the amounts which should be payable under the penalty scheme.

ii) The report on the woman who alleged that her husband’s tax bill had grown from $1300 to $47,000 over three years was inaccurate and misleading, the IRD contended, and no attempt had been made by the broadcaster to explain the position.

iii) The IRD listed a number of other factual errors relating to the woman’s account which it claimed created an unfairly negative impression of the Department and of tax penalty laws. These errors included: the perception that it was the IRD which took the woman’s car; that the men who assessed her property were from the IRD; that the man who told her she had 24 hours in which to repay the $47,000 debt was associated with the IRD; that she personally owned the home she was living in; that the IRD was going to take her home away to meet the debts incurred by her husband; and that she was a victim of the IRD.

None of these facts was correct, the IRD observed, and together they combined to create an unfair and unbalanced portrayal of the Department in a manner likely to create unnecessary alarm in the community and to prejudice its ability to collect taxes as it was required to do by law. It pointed out that public records – which were available to Holmes – showed that the Official Assignee had obtained judgment against the woman and her husband as trustees of a trust for $66,902 and the Court had made orders for the sale of the trust’s property. The IRD was owed $25,884 in unpaid taxes.

The IRD complained that the woman’s story was never verified with it or any other party and that Holmes should have suspected that the woman’s facts were not correct. It suggested that the reporters had had sufficient time to check the facts.

TVNZ’s Response

i) Responding to the complaint that two of the faxes which were read out were factually incorrect, TVNZ maintained that viewers would not have believed that the figures cited had arisen from just one instance of unpaid tax. The authors of those faxes were, it said, "ordinary citizens unable to keep up with payments on interest, penalties and unpaid tax." It noted that even if there were doubt, that would have been dispelled by the tax experts’ analysis of how tax bills accrued. Further, TVNZ argued, it was difficult to see how relating the genuinely-held opinion of a correspondent to the programme should be unfair or biased against the IRD. "It simply represented a level of anxiety revealed in the country as a consequence of the previous night’s broadcast", it wrote.

ii) Next, TVNZ dealt with the IRD’s claim that the size of the tax bill incurred by the husband of a woman featured on the programme had been grossly exaggerated. TVNZ suggested that common sense showed that a single bill of $1300 could not stretch to $47,000 by itself. Such an increase was simply not credible, it argued, and it did not believe viewers would have understood it to be so.

iii) With respect to the complaint that the woman featured was wrong in her belief that it was the IRD which took action to recover property to offset her husband’s debts, TVNZ responded that that was her honest belief. It observed that the Codes of Broadcasting Practice upheld the right of individuals to express their opinions. In TVNZ’s view, the reason why the woman’s circumstances were of interest was because her case also demonstrated that innocent people such as wives and family were affected by the actions of the IRD. It suggested that it was reasonable to assume the men who came to her home represented the IRD because it was a party to the court judgment against the family and stood to gain a substantial amount from the sale of the trust’s property.

When it considered fairness and balance, TVNZ pointed to the fourth programme where the presenter specifically referred to the IRD’s statement which commented on the woman’s assertions. TVNZ added:

In accusing Holmes of making "no attempt to verify any of these matters with the IRD" you [the Commissioner] appear to have overlooked the point you made strongly on the first programme that you are not allowed by law to comment on the detail of individual tax cases.

The IRD’s Referral to the Authority

i) The IRD repeated its point that the reference to faxes received from two individuals in response to the previous night’s programme failed to explain to viewers that such large debts could only have arisen if core tax had not been paid, in addition to penalties and interest.

It described as remarkable TVNZ’s categorisation of the two cases as being those of "ordinary citizens" unable to keep up with their seemingly ordinary tax liabilities. Even from the limited information given, it was clear that the cases were far from ordinary, it wrote, particularly as one man was said to be earning only $32,000 a year, yet he had incurred a tax debt of $16,000 which within two years had grown to $52,000. It rejected TVNZ’s defence of these faxes being the "genuinely-held opinion" of the taxpayers concerned.

ii) Turning to the woman whose husband’s tax bill was said to have grown from $1300 to $47,000, the IRD repeated that a wrong impression was created about how that debt accrued. In failing to verify the story, it wrote, TVNZ had failed in its obligation to ensure fairness and balance.

iii) The IRD repeated that there were matters revealed in the woman’s story which should have put the broadcaster on notice of its inaccuracies. As a matter of basic commercial law, it argued, TVNZ should have appreciated that it could have been any of her husband’s creditors who visited the home in the circumstances alleged. The IRD observed that its debt recovery actions against the woman’s husband had ended in 1992 when he was made bankrupt. Had TVNZ examined the court file, it continued, it would have learned that far from being an innocent victim, the woman had a judgment against her for about $66,000 as a beneficiary in a family trust. As another point, the IRD observed that although the woman claimed it was her home, in fact the property was owned by a family trust.

TVNZ’s Response to the Authority

TVNZ said it stood by its description of the fax writers as "ordinary citizens" who were not able to keep up with their tax liabilities. It argued that the faxes expressed the writers’ opinions that they could not keep up, and the difficulties they perceived in their dealings with the IRD.

The programme relayed the woman’s perception of events, TVNZ asserted. She genuinely believed that the actions of the bailiffs were instigated by the IRD, it added. The IRD became a party, in her view, because that was where the family’s troubles began. It continued:

In the context of the bigger issues under debate, there should not be a need to explain in detail each step in the process. [The woman’s] story represents what can eventually take place when people run into difficulty with the IRD, and how it affects other members of the family…

In TVNZ’s view, reasonable efforts had been made to present balanced programmes and the opportunity had been given to both sides to debate the issues.

The Authority’s Findings – 3 February Programme

i) The first complaint about this programme was that the two faxes from aggrieved taxpayers which were read out were misleading and factually incorrect. In each case, the Authority notes, the implication was clear that relatively small defaults were capable of reaching debts of tens of thousands of dollars within a short period of time. One person claimed to have had a bill of $763.00 grow to $32,000 in three years. Another said that his debt of $16,000 had, with penalties, increased to $84,000 within two years and yet he only earned $32,000. While it accepts that these faxes were read as received, and that they expressed the views of the unidentified authors, the Authority considers that in the absence of balancing or explanatory comment, they served, overall, to give an unfair impression of the IRD. No attempt was made to analyse the content of these faxes, nor to distinguish between tax originally assessed, further assessments, or penalties. Nor was there any analysis of possible GST obligations. In the result, the Authority concludes that reliance on this material, without balancing input, created an erroneous impression about how the penalty regime operated. It does not agree with TVNZ that the tax experts’ general explanations as to how tax bills accrued would have sufficed to provide the necessary balance since they did not challenge these erroneous impressions. The Authority upholds this aspect of the complaint as a breach of standard G6.

ii) The IRD’s next complaint concerned the case of a woman featured who claimed that her husband’s tax bill had grown from $1300 to $47,000 over 3 years. That, said the IRD, defied credibility. As in the cases cited above, the Authority accepts that this was the woman’s genuinely-held view. To that extent, it was an accurate report of what she claimed the position to be. However, it finds that the omission of any detail as described above and the omission of any detail to explain the couple’s personal and property affairs helped to create an erroneous impression about the IRD which was unfair. Furthermore, the IRD was not invited to comment - even in general terms - on the woman’s claims. It upholds this aspect as a breach of standard G6

iii) A further complaint about the claims made by the woman related to her assertion that it was the IRD which had sent bailiffs to her home and subjected her and her family to an asset test and forced her to borrow $47,000 to repay her debt or risk being forced to sell her home. The IRD contended that the woman’s claims created a false and misleading impression about how it sought to recover debts. It pointed out that public records would have shown TVNZ that the Official Assignee had obtained judgment against the woman and her husband as trustees of a trust for $66,902 and that IRD was but one creditor, being owed $25,884 in back taxes.

Again the Authority acknowledges that the woman was entitled to express her views, even if she was apparently mistaken in her belief that the men who came to her door to conduct an asset test, and who she claims threatened her with the sale of the family home, were from the IRD. But, in the Authority’s view, these were serious accusations which needed to be checked with the authorities concerned or should have been put to the IRD - even in general terms - to clarify the issues raised. The programme’s failure to do so created an adverse impression about the IRD which the Authority considers was unfair. It is not a defence, as TVNZ apparently claims, to assert that by law the Commissioner could not comment on the detail of individual tax cases. Here, the court proceedings were a matter of public record. And it was always open to the Commissioner to rebut the claims on a general basis without disclosing confidences if given the opportunity. But no such opportunity was offered. The Authority notes that some balancing material was included in the programmes on 5 and 6 February, but for reasons which it makes clear later in this decision, it is not satisfied that this limited information did justice to the IRD’s position. Accordingly it upholds this part of the complaint as a breach of standard G6.

Complaint – 4 February 1999

This programme began by reporting that TVNZ had continued to receive a large number of faxes and telephone calls from viewers expressing their frustration with the IRD and its staff. The Minister of Finance and ACT MP Rodney Hide were guests on the programme. The Minister was asked what he intended to do to curb the IRD’s powers and whether the Department had been over-zealous in ensuring compliance with tax laws. Mr Hide expressed his view that the penalties regime was oppressive and, when combined with the tactics employed by the IRD, resulted in unnecessary hardship to many taxpayers. The Minister then said he endorsed the proposal to have a tax ombudsman.

Next, the presenter referred to a fax received from the IRD that day asserting that many of the facts presented the previous evening about the case of a woman whose assets were threatened were untrue, and in particular that it was not the IRD staff who had come to her home. The woman was then interviewed by telephone and stated that as far as she was concerned, the IRD had sent the debt collectors to her home. She acknowledged that the debts had been incurred by her former husband and reported that she had had to borrow $47,000 to keep her family home from being sold.

i) The IRD complained about the presenter’s opening statement when he said:

"the Commissioner admitted on this programme the other night that the Department was in the wrong in its treatment of [the man featured in the first programme]." It contended that constituted a breach of s.4(1)(d) and standards G1, G4, G6, G14 and G16. In fact, the IRD reported, what the Commissioner had said was: "This is not a typical case, it is a very sad case, and it has my full sympathy. I think it goes without saying that something wasn’t right with this case."

The IRD denied that the Commissioner had admitted wrongdoing in relation to this case, noting that he had merely said the result was unfortunate.

ii) The IRD objected to the presenter’s assertion that it had received a threatening fax from the IRD in relation to the woman featured the previous night. It contended that the statement that the IRD was using standover tactics and was threatening the woman were totally unjustified and cast the Department in a negative light. It pointed out that the purpose of sending the fax was to advise that the statements made by the woman and the conclusions drawn were incorrect. It denied that the fax could be interpreted as containing any threat to the woman.

TVNZ’s Response

i) TVNZ maintained that the Commissioner had made an admission that the department was wrong in its treatment of the man who committed suicide. It argued that the Commissioner’s admission that "something wasn’t right" could reasonably interpreted as meaning that something was therefore wrong.

ii) To the IRD’s complaint that it was unfair to refer to its fax regarding the woman featured the previous night as intimidatory, TVNZ responded that in the context of the events of the week, that interpretation was a reasonable one. In the circumstances, it said it did not believe the presenter had acted improperly in referring to the fax. It also noted that the fax contained the statement that "we have been able to identify the woman named as Lynne" and that the first page had included a handwritten note which said: "Here is a statement for you. It is very important that you take note".

The IRD’s Referral to the Authority

i) The IRD repeated its contention that it was unsustainable for the presenter to assert that the Commissioner had acknowledged the IRD had treated the suicide victim wrongly. That, it said, was an expression of opinion, and should not have been stated as an unqualified fact.

ii) It was not reasonable, the IRD contended, for TVNZ to claim that its fax to TVNZ regarding the woman named the previous night was open to misinterpretation. It noted that the fax had merely stated that the IRD knew who the woman was and that her story was incorrect in a number of instances. It rejected any suggestion that it wished to frighten or threaten the woman.

TVNZ’s Response to the Authority

i) TVNZ maintained that the Commissioner had, by acknowledging that "something wasn’t right with this case", implicitly admitted that the IRD’s treatment of the suicide victim had been wrong.

ii) TVNZ accepted that there may not have been any actual statement in the fax that the IRD wished to frighten or threaten the woman who had appeared the previous evening, but it argued that the handwritten note was open to a threatening connotation.

The Authority’s Findings – 4 February Programme

i) The IRD objected to TVNZ’s interpretation of the Commissioner’s remarks concerning the case featured in the first programme. It said that he had not conceded that the Department had been wrong in its treatment of the man who had subsequently committed suicide, emphasising that he had simply stated that something was "not right" with the case. In the Authority’s view, while it was something of an oversimplification, it was open to TVNZ to interpret the Commissioner’s remarks in the way that it did. It declines to uphold this aspect of the complaint.

ii) Next, the IRD complained about TVNZ’s interpretation of a fax it had sent regarding the claims made by the woman featured the previous night as "threatening". It denied that the fax contained anything which could be construed as threatening. The purpose of the fax was simply to make clear that the woman’s account was not accurate, it argued. In its defence, TVNZ pointed to the handwritten note on the first page which read: "Here is a statement for you. It is very important that you take note."

In the Authority’s view, the faxed statement - including the handwritten note - contained an urgent tone. It does not consider that the description of the fax – or the statement itself – as "threatening" was accurate. It concludes that the IRD simply sought to correct what it considered to be the totally erroneous impression which had been conveyed by the woman interviewed the previous evening. TVNZ’s description of the fax in this way overstated the matter, and opened the way for some more sinister implication to be drawn. In the context of the on-going debate, in which the IRD was very much under fire, this was unfair, the Authority concludes. It therefore upholds this part of the complaint under standard G4.

Complaint – 5 February 1999

The final programme in the series began with the presenter reading a fax from a former employee of the IRD who asserted that staff were given performance bonuses for finding and assessing taxpayers with discrepancies in their tax returns. Every month, she contended, statistics were distributed around the staff showing how much each had collected.

The presenter then reported that a fax had been received that day from the IRD claiming that statements made on the programme during the week had been "grossly inaccurate". He said it had denied the claims that officers from the IRD had forced their way into the home of a woman featured in the 3 February programme, searched for assets and demanded payment of $47,000 in 24 hours. According to the fax, the IRD’s debt recovery action against the woman’s husband had ended when he was adjudicated bankrupt in 1992, he reported, adding that the IRD contended that the programmes had created a distorted picture of the way it operated.

In the second half of the programme the presenter read a memo which he said had been written by the Commissioner to IRD staff concerning the case featured in the first programme. In the memo, the Commissioner had defended the work of his staff on the case, and had advised that the case was going to be reviewed. In the meantime, he said, the basic principles and policies of the Department were sound, and he asked staff to continue to apply them.

In conclusion, the presenter noted that the matters raised in the programmes had generated a great deal of interest in the community.

i) The IRD complained that when the presenter read out the fax it sent, he omitted to read a significant paragraph which referred to the fact that the Official Assignee had obtained a judgment against the woman and her husband as trustees of a trust for $66,9002.50 and that orders had been made for the sale of the property held in that trust. IRD was owed tax of $25,884.37.

ii) The IRD complained that the omission of that paragraph significantly lessened the impact of its statement faxed to Holmes.

TVNZ’s Response

TVNZ maintained that as the faxed statement was received late in the day, there was insufficient time for the details to be checked or for the matter to be put to the woman for comment. In its view, the claims would have confused the audience unless they had been checked first. Its view was that editorial discretion had been appropriately exercised in this case.

TVNZ also added that it was under no obligation to use in full every statement which was sent to it. It argued that far from lessening the impact of the statement, the extracts used had focussed on the main issues.

The IRD’s Referral to the Authority

The IRD appended a copy of its statement sent to TVNZ on 5 February, noting again that a key paragraph had been omitted when it was read out on the programme. In its view, the matters raised in that paragraph would have added significantly to understanding that the woman’s account had not been accurate.

TVNZ’s Response to the Authority

TVNZ denied that the programme contained "so many inaccuracies" as contended by the IRD.

As for the omission of the paragraph read out, it maintained that it was not the key paragraph of the statement. The key message – which was read out – was that the IRD rejected the woman’s version of events.

The Authority’s Findings – 5 February Programme

The principal complaint about the final programme in the series was that TVNZ had, in reading the statement from the IRD regarding the case highlighted earlier in the week, omitted a crucial paragraph from the statement. In that paragraph it explained that the woman who claimed to have been harassed by debt collectors on behalf of the IRD was, with her husband, a trustee of a trust for $66,902 which was the subject of a court judgment obtained by the Official Assignee. Court orders had been made for the sale of the property held in the trust. The IRD was owed tax of $25,884.

TVNZ maintained that there was insufficient time for it to have checked this matter or to put it to the woman for comment before going to air. It argued that it had used its editorial discretion appropriately in omitting the paragraph when the statement was read.

The Authority finds that the omission created an unfair impression about the facts of the case. It was a crucial paragraph because it revealed that the IRD was only one of a number of creditors and that the Official Assignee had successfully challenged the trust disposition in court. The Authority does not consider that TVNZ was justified in excluding the paragraph on the basis that it had had insufficient time to check the matter, or to put it to the woman for comment. The facts were a matter of public record and were significant in placing the woman’s assertions in context. It concludes that the omission of the "crucial paragraph" unfairly dealt with the IRD’s position and that this part of the programme lacked balance. It therefore upholds this as a breach of standard G6.

Complaints – Overall

The IRD contended that the programmes showed an intention to portray it in a highly negative manner, which was not justified on the true facts in the cases highlighted. It complained that the programmes lacked balance and impartiality, were designed to cause unnecessary alarm in the community, and in attacking the tax laws, failed to respect the principles of law.

As a final point the IRD argued that there was significant public interest in protecting public perceptions of the tax system from inaccurate and misleading news coverage.

TVNZ’s Response

TVNZ denied that the programme set up the IRD in a "highly negative manner". It pointed out that the story prompted an unprecedented wave of public comment, almost all of which came from "ordinary, sometimes hapless and often angry New Zealanders". It added:

Any news organisation which set such reaction aside for fear of painting the tax department in a negative light would be failing it its role of investigating issues which are clearly matters of public interest.

TVNZ did not consider the complaint had established that the programmes lacked balance and impartiality and denied any intention to cause alarm among the community. It also denied that the programme failed to respect the principle of taxation laws. It argued that the fact that people were obliged to pay tax was a "given" and did not need to be explained.

In maintaining that the programme was balanced TVNZ argued that the story was properly and responsibly pursued as a matter of public interest. It noted that was a view which appeared to be validated by the government’s subsequent decision to order a wide-ranging inquiry. It said it believed the two cases highlighted were pertinent and in the public interest. In its view, they illustrated the problems that had been described in the department.

As far as the complaint under section 4(1)(d) was concerned, TVNZ drew attention to the provision that balance be achieved "within the period of current interest". That encompassed broadcasts on 2, 3, 4 and 5 February, and 3 March, it wrote.

Turning to standard G1, TVNZ advised that it had been unable to detect any proven inaccuracies in the programmes. It acknowledged that there were differences of opinion, but considered that viewers were in a position to draw their own conclusions.

As far as standard G4 was concerned, TVNZ maintained that Holmes had acted fairly throughout. It noted that the IRD had had an opportunity to respond to both cases.

TVNZ emphasised that the programmes did not question the legislative authority to collect taxes. Instead they questioned the IRD’s sometimes inflexible position on penalties and interest, illustrating that stance by referring to specific cases where it had apparently been uncompromising in its dealings with taxpayers. It rejected the complaint under standard G5.

TVNZ rejected the complaint that any deceptive programme practice had been employed in the programme in contravention of standard G7.

With reference to standard G14, TVNZ expressed its view that the issues raised were clearly in the public interest and that they had been presented objectively and impartially. It noted that other news media had also judged the issues to be of public interest and that the government had announced a wide-ranging public inquiry into the matter.

TVNZ did not accept that standard G16 was breached. It accepted that the individual cases reported were disturbing, but said it was made clear that they represented only a small proportion of the cases handled by the IRD. Far from causing alarm, TVNZ contended the frank and open discussion of the issues would have been of comfort to many. In this case, it wrote, the broadcasts in part led to a government inquiry.

Finally, TVNZ turned to standard G21, which it said was irrelevant since there were no significant errors of fact which needed correction.

The IRD’s Referral to the Authority

The IRD acknowledged that it was often subject to robust scrutiny by the media, and accepted that the freedom of the press was a core democratic value. However, it maintained, in this case, TVNZ had failed to adhere to the minimum standard required by broadcasters. As TVNZ had rejected every aspect of its complaints, it sought an appropriate remedy from the Authority.

TVNZ’s Response to the Authority

TVNZ rejected the contention that it had failed to observe minimum standards required by broadcasters. On the contrary, it argued, it had fairly scrutinised the workings of the Department.

In TVNZ’s view, it was surprising that the Commissioner had suggested that the items were a serious abuse of freedom of expression. It pointed to the legitimate areas of concern identified by the tax experts and the suggestions for reform through a Tax Ombudsman, which had been advanced on the programme.

The Authority’s Findings – Overall

In reaching its overall conclusions on the programmes, the Authority is cognisant of s.4(1)(d) of the Broadcasting Act 1989 which provides that balance may be achieved "in other programmes within the period of current interest". In its assessment of the complaints relating to the individual programmes, the Authority has taken this provision into account. It has, nevertheless, found some specific breaches.

For example, with respect to the first programme, it was never explained how an underpayment of $84.00 could grow to $86,000 in such a short time, because it was not made clear that the latter figure comprised not just penalties but additional tax which was due (and possibly GST collected as well). It is clear to the Authority from the publicity generated in other media after the programme that there was a common misconception as to how the $86,000 debt was derived. Because the Commissioner was not able to comment on the specifics of the case, and because of the failure of the audio-visual link, he was not in a position to correct any misconceptions which arose. Subsequent programmes did not provide redress since the particular case was not referred to in specific terms again.

Aspects of the second programme – and in particular the failure to provide balance – also constituted a breach of standards, the Authority finds. While it acknowledges the woman’s right to express her opinions, the Authority considers that in the context of an ongoing investigation into the IRD’s practices it was crucial that it be represented fairly and accurately. Because no adequate opportunity was given to the Department to respond to the claims, an inaccurate and unfair perception remained. In the Authority’s view, subsequent programmes did not provide the necessary balance, or redress the unfairness. In particular, it notes the omission of a crucial paragraph from the IRD’s statement in response which was read out in the fourth programme.

Although it has upheld some aspects of the complaints, the Authority observes that in each instance the breaches related to specifics of the cases highlighted. Overall it considers the series of programmes successfully highlighted legitimate areas of concern with how the IRD operates and how it implements its penalty regime. It is apparent from the public response to the programmes that many taxpayers shared the concerns which were raised.

As a final explanatory point the Authority advises that it has dealt with the complaints under standards G4 and G6, subsuming all other aspects under these standards. In its view, the essence of the complaints related to the programmes’ failure to deal fairly and to provide balance. In subsuming the additional standards raised the Authority has nevertheless taken those matters into account when reaching its decision.

For the reasons set forth above, the Authority upholds the complaint that aspects of the series of programmes broadcast by Television New Zealand Ltd on Holmes on 2, 3, 4 and 5 February 1999 breached standards G4 and G6 of the Television Code of Broadcasting Practice.

Having upheld a complaint, the Authority may impose penalties pursuant to s.13(1) and s.16(4) of the Broadcasting Act 1989. It invited submissions from the parties as to penalty.

The Authority has considered the submissions. It acknowledges that the programmes dealt with a significant issue of public interest, and highlighted legitimate areas of concern with how the IRD operates. However, as the decision records, the broadcaster failed to comply with standards in a number of specific instances. On balance the Authority concludes that no penalty is warranted in the circumstances.

Signed for and on behalf of the Authority

Sam Maling
Chairperson
7 October 1999

Appendix

The following correspondence was received and considered when the Authority determined the complaints:

1.    Inland Revenue Department’s Complaint to Television New Zealand Ltd
       – 1 March 1999

2.    TVNZ’s Response to the Formal Complaint – 25 March 1999

3.    IRD’s Referral to the Broadcasting Standards Authority – 22 April and 14 May 1999

4.    TVNZ’s Response – 2 June 1999

5.    The IRD’s Final Comment – 21 June 1999