54 spending based on their emotions and a lack of distinction between business

54 spending based on their emotions and a lack of

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discussed in Chapter 4, section 4.5.4.); spending based on their emotions; and a lack of distinction between business and personal monies. These behaviours resulted in tax payment difficulties, tax penalties and stress: “It is the gap of skills and knowledge. Like the Chinese and the Indians, they are the ones who are doing Business studies, they are the ones doing the Accounting and Economics whereas the Maori would go into kapa haka (cultural studies), which is great for cultural perspective, but long term it is not going to put food on the table.” (BE5) “Some also started with not enough capital behind them and because of that, they get into cash flow problems. They get into trouble with the IRD because of the cash flow problem. That stems from not doing any forward planning. Some don’t know how to do the planning, and some were too busy to find time to do it. Some think that they can get away without doing it. Some don’t keep an eye on how their business is doing financially. Some cannot tell you how well they do in terms of sales and expenses. They are only interested in the money in the bank and they don’t know about when some money is due. They should have set aside some excess cash in order to make tax payments.” (BE3 and BE4) To address their tax payment difficulties for Maori, BE12 suggested financial literacy be required for Maori and Pacific operators in order to comply: “Maori had a deep need for financial literacy and so do Pacific Islanders. They have no understanding of short term and long term financial strategies. They have no understanding of savings, no understanding of apportioning income, and certainly no understanding about tax.” (BE12) Contrary to popular thinking, M6’s audit experience was better than what she had originally anticipated and it created a greater awareness for her to be financially literate and to have a good record keeping system. She learned the adverse consequences of unplanned spending, poor record keeping and debt financing from the tax audit:
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125 “I sold my house to pay off the IRD debt and to become financially debt free again which I haven’t been in since I was 20. These days I keep away from things that said interest free for 36 months. I haven’t bought anything on hire purchase for years. I don’t have a Visa card but I have a debit card with a Visa component. There is just too much out there to get you in debt.” (M6) Coming from a high power distance culture, M6, like most other Maori in this sample, showed fear towards the IRD. They manifested their fear by not contacting or responding to any of the IRD’s requests over prolonged periods. BE3, BE4 and BE12 observed that most Maori operators with tax payment difficulties normally denied the existence of their tax problems which resulted in compounded tax debt and mental anxiety: “Leading up to having difficulties paying the IRD the last time, I had mountains of envelopes and letters unopened from the IRD. I was in denial. The fear of having to deal with them and opening those letters
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  • Fall '16
  • tax compliance, SME Operators

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