More than 4000 Inland Revenue and Ministry of Business, Innovation and Employment workers will go on strike next month as a "last resort" following failed talks with employers.
Those taking strike action are Public Service Association members who will hold two two-hour stoppages on 9 July and 23 July over concerns about a lack of a "cost of living pay increase" and heavy workloads.
PSA National Secretary Erin Polaczuk said, "Our bargaining teams went to today's meetings prepared to talk - and to find common ground which might avert this potentially disruptive action."
"They were shocked and deeply disappointed at the employers’ defiant take-it-or-leave-it attitude."
Ms Polaczuk said their proposal was distracted "despite a $29 million operational underspend" which will be returned to the Government.
"Knowing the money is there, but IR simply doesn’t want to give staff a modest cost-of-living increase is insulting, particularly in the middle of the chaotic breakdown of IR’s systems."
Today's talks marks the third PSA proposal to be rejected by Inland Revenue.
At the MBIE meeting, the employer proposed for PSA members to work a longer work week for the same salary - an "attempt to resolve its much-publicised problems with pay and holiday pay", the statement said.
The PSA's MBIE bargaining team asked for a cost of living pay increase, as well as changes to address slow progression within the ministry, but Ms Polaczuk said MBIE's offer fell "far short".
"It's bizarre for employers to come to the table with strike action looming, and actually bring an offer that is worse for their staff.
"Our members at MBIE and IR are not highly-paid fatcats - at IR, a quarter are paid less than $48,000 a year."
Ms Polaczuk called next month's strike action "a last resort".
"They [IRD and MBIE staff] do not want to pass on the inevitable disruption to the customers and stakeholders who rely on their agencies every day."
It will be the first time in 22 years since Inland Revenue employees have gone on strike.