New Zealand’s reputation at stake

Today’s ODT editorial says that “New Zealand is not a tax haven in the way many countries in the world operate” but the country’s reputation is at stake over the Panama papers revelations.

NZ’s reputation at stake

Prime Minister John Key is moving to protect the international reputation of New Zealand as a place to do business, with the release of the Panama Papers forcing his hand.

The Panama Papers have proved to Kiwis that this country is being used by foreign business people and global leaders as a way to pervert the tax laws of their home countries.

Let’s be clear, however. New Zealand is not a tax haven in the way many countries in the world operate. Our foreign tax laws may be used by overseas people to defraud their own countries of tax, but our tax base is not being exploited. Nothing about those trusts is illegal in this country with most apparently meeting our tax laws.

Nothing relating to new Zealand has been found to be illegal – yet – but if overseas people can use New Zealand’s trust laws to hide illegal activity or avoid tax illegally then it looks bad for New Zealand.

However it should be noted that if New Zealand wasn’t being used for questionable trusts other countries would be used – as they are, far more than New Zealand is.

What is at stake is New Zealand’s reputation which is seen around the world transparent and stable. We are consistently at the top of tables about the ease of doing business, the least corrupt country and one of the most transparent.

Mr Key is indicating a second phase of anti-money laundering measures may be brought forward in the wake of the Panama Papers. He denies the papers are evidence New Zealand is a tax haven, in line with tax experts. Here the foreign trusts need to provide information to Inland Revenue and the trustee fills out an annual return. In tax havens, little or no information is supplied to authorities.

If there is potential reputational damage then something needs to be seen to being done about it.

There has been no indication any of the people named were acting illegally, just that they were involved in some way or another. The tall-poppy syndrome is never far from sight in this country. The latest name dump is guilt by association, without context.

That is also a major issue that could affect reputations of those implicating named people in shady dealings.

Labour leader Andrew Little is saying Mr Key has damaged New Zealand’s reputation by siding with those people keen to limit their tax obligations. Labour will abolish foreign trusts but it needs to be said the current regime was put in place by former Labour finance minister Sir Michael Cullen in 2005.

Sir Michael required foreign trusts with New Zealand resident trustees to provide some tax information to Inland Revenue – exactly what is currently happening.

Thanks to the past Labour led government and the current National led government New Zealand’s tax and trust laws are (or have been) highly regarded. That is apparently a part of the problem, our reputation is being exploited by some people who want to use trusts.

The Government has appointed well-regarded accountant John Shewan to undertake an independent review of disclosure rules covering the foreign trusts in New Zealand. Mr Key indicated the Government is open to any changes Mr Shewan may suggest.

So far, New Zealand has complied with every information request from its treaty partners to the standard set by the OECD and $205 million has been invested since Budget 2012 to strengthen compliance work by Inland Revenue.

Reputational damage is hard to repair and Mr Key will be wise to act quickly on recommendations coming from both Mr Shewan and Inland Revenue.

The spotlight will be on Shewan’s report in particular. Somethig needs to be seen to being done.

For the good of New Zealand’s reputation Labour need to work positively with this with the Government to ensure our good tax and trust laws are improved.

Leave a comment

59 Comments

  1. Corky

     /  11th May 2016

    As hard as I try I don’t see the problem. Governments routinely engage in defrauding their citizens, yet citzen who try to defraud the state are labelled bad guys. Governments keep secrets from their citizens, like the Saudi prince who helped bankroll Netanyahu’s election campaign. Yet citizens aren’t allowed to keep their personal affairs private. Bit of hypocrisy here I think.

    Reply
    • Kitty Catkin

       /  11th May 2016

      Not at all. No government can make issues of security public-who would expect this ? There are many things that cannot be made public, but equally, I would like to know that the person running an after-school programme isn’t someone just out of prison for paedophilia. Most things are private, of course, like medical and financial history. I don’t flatter myself that anyone would be really interested in my finances and illnesses, anyway, they’d die of boredom.

      Your remarks are too vague to have any credibilty, apart from one.

      Reply
  2. David

     /  11th May 2016

    NZ media get into quite a funk over our overseas reputation when there is either an opportunity to attack Key or when there is no substance and this is the only way left to attack Key.
    Mike Joy with the Greens assistance told the world we had toxic water, SAFE took out adverts in British newspapers, the media fed the WSJ issues with Fonterra. Of all things that may damage NZs reputation this is one that wont, its a domestic story involving dozens of countries which is barely being reported overseas. As per usual our media have gone completely over the top as is the way they operate, the public have very very little interest in this story which is quite boring.

    Reply
    • alloytoo

       /  11th May 2016

      it’s a shark frenzy over a crippled (and in the case of Hubbard long deceased) sardine.

      Reply
      • Kitty Catkin

         /  11th May 2016

        It’ll be the usual nine day wonder-that old saw is still accurate, nine days is about as long as these things last.

        Anyone who believes that there is tall poppy syndrome here should read the UK Guardian where people who have succeeded are routinely torn to pieces. There’s even a UK magazine devoted entirely to unflattering photos of celebrities-AND PEOPLE BUY IT !

        Reply
        • Gezza

           /  11th May 2016

          Idiots! You can see all those ones & more that you want to just by googling their name and clicking “view more pictures”.

          Reply
          • Kitty Catkin

             /  13th May 2016

            I suppose that with the magazine, they know what they’re getting and can keep it to snigger over. Even if I was interested, the shame of being seen buying such a thing would put me off-it’s pathetic. Imagine someone seeing it in your house. How humiliating-although I suppose that your friends, if you had any, would be the same spiteful, jealous sad sacks as you were.

            Reply
  3. alloytoo

     /  11th May 2016

    What is particularly worrying is the oppositions eagerness to get the political boot in. Unable to look beyond their party political agenda. Unfit to govern.

    Reply
  4. David

     /  11th May 2016

    Further to the above Andrea Vance is quite the conspiracy theorist and full of hyperbole. I think TVNZ and RNZ have damaged their reputation more than NZs overseas one, there is really no disguising the agenda.

    Reply
  5. Ray

     /  11th May 2016

    Do people really think badly about “tax havens ”
    Is that what you think of when you think of Switzerland or Jersey, really!
    How about the top 10
    http://www.therichest.com/expensive-lifestyle/location/the-10-biggest-tax-havens-in-the-world/?view=all
    Labour/Green beat up and different when they do it

    Reply
  6. Alan Wilkinson

     /  11th May 2016

    If journalists are concerned about reputation the one they need to worry about is their own. Pathetic media beat ups like this will make it even worse and it is already at the bottom of the heap.

    Reply
    • Gezza

       /  11th May 2016

      I agree. This whole episode passed the point of farcical a fortnight or more ago. Now it’s just embarrassing to watch, read & listen to. It looks like we’ll need extra disclosure rules & they’ll probably be put in place. There’s been no evidence of criminality found at all yet but the way Labour and the media have been breathlessly carrying on for weeks you’d think massive numbers of tax-evading evil-doers have been falling out of the woodwork everywhere since day one. Just ridiculous.

      Reply
      • Kitty Catkin

         /  11th May 2016

        It seems as if some people can’t or wont see that being a tax haven is quite legal (yawn) and not where the Mafia et al send their money to the laundry for a good dry-cleaning.

        Reply
  7. Corky, David, Alloytoo and Ray. Couldn’t agree more with all your sentiments. This is just another ham-fisted attempt by a desperate Opposition to elevate their “moral and ethical ” status by attaching themselves to a narrative. First and foremost their narrative damned them by association. Our relevant tax laws were implemented by Labour. They’ve misjudged public opinion and suffer from echo chamber deafness, an utter lack of political nose, sufficient funds to poll and have allowed themselves to be manipulated by darker forces and people with agendas like Hager and McCarten. Even the dullest voter gets that the Opposition are toothless car chasing dogs.
    It’s all so little boy who cried wolf.
    The public sympathy lies largely with a government running our little country well while a barking mad and motley crew of activists constitute a profoundly unfit to govern Opposition.

    Reply
    • … And Mr Wilkinson of course 🤗

      Reply
      • Gezza

         /  11th May 2016

        Can I just clarilfy something Trav? Are you saying Mr Wilkinson is a barking mad activist profoundly unfit to govern? o_O

        Reply
        • Alan Wilkinson

           /  11th May 2016

          What’s with this “Mr” tag? It’s Alan or Dr to you.

          Reply
          • Gezza

             /  11th May 2016

            Sorry Al

            Can I just clarify something Trav? Are you saying Dr Wilkinson is a barking mad activist profoundly unfit to govern? o_O

            Reply
            • Alan Wilkinson

               /  11th May 2016

              That’s much better. Woof, woof!

        • No, I’m not – but he might be. 😳

          Reply
          • Gezza

             /  11th May 2016

            Oh yes, I definitely think he is. Alan’s made it quite clear he’d like being involved with government about as much he’d like walking barefoot over hot lava.

            Reply
    • alloytoo

       /  11th May 2016

      So much more could have been achieved with a measured bipartisan approach.

      Reply
      • Gezza

         /  11th May 2016

        As Little is consistently demonstrating, they’d rather go for a short-measued bi-polar approach.

        Reply
        • Gezza

           /  11th May 2016

          I need a spelcheka!

          Reply
          • Kitty Catkin

             /  13th May 2016

            Watt makes u say that ? Any weigh, spell cheques r a dammed nuisance, they seam to try to force American you sage on two the user.

            Reply
  8. Brown

     /  11th May 2016

    This is the most non-story this year apart from the point that the “Get Key” frenzy has become a badge of insanity of the envious loonies on the left. This is not journalism – its a lynch mob.

    To resolve this non problem the world’s citizens would need to have no privacy, no freedom and no independence from the state. There are places a bit like that in the world already but no-one sensible wants to live or invest in. People running such places will be using offshore structures to hide money while their people starve. The poster child Palestinians do it, Dear North Korean leader, Mugabe, Castros and so on. All are loaded and its not in the local bank on the corner.

    Hager has put his name out there over this which shows he is stupid as well as nasty. I’m becoming sooo sick of the sound of his voice and the sight of his face.

    Reply
  9. Ratty

     /  11th May 2016

    I’m confident that we are not a Tax Haven.

    However I am not confident we are not perceived as one (that can have very detrimental effects with our DTA partners)..The motivation doesn’t look good as to why they chose to Settle in New Zealand, some can be accidental I admit.

    Deborah Russell (Again, taking her politics out of the equation, really knows her stuff), discussed the differences about differing Tax Laws regarding Trusts around the World, with ours based on the residence of the Settlor, others based on the residence of the Trustees, I believe ours is the correct position.

    A bit like comparing Shareholders to Directors (in a roundabout way)..

    Maybe time to base a Trusts residency back on the Trustees.

    Reply
  10. Along with everything else, I don’t know why we’re not talking about the issue at root of all this; the divergence of ethics and law?

    “Tax avoidance, while legitimate, can be seen as aggressive when it involves using financial instruments and arrangements not intended as, or anticipated by, governments as a vehicle for tax advantage. For example, the use of overseas tax havens.

    Avoiding tax and bending the rules of the tax system is not illegal unlike tax evasion; it is operating within the letter, but perhaps not the spirit, of the law … Businesses may therefore be complying with the law – but is it ethical?”

    http://www.theguardian.com/sustainable-business/avoiding-tax-legal-but-ever-ethical

    Reply
    • Gezza

       /  11th May 2016

      Along with everything else, I don’t know why we’re not talking about the issue at root of all this; the divergence of ethics and law?

      Kia ora PZ. IMO, because Little & the MSM have chosen to push the “there must be criminality here” line, so the ethical discussion (apart from someone occasionally pointing out there are several good reasons why some people might want to use foreign trusts in corrupt countries etc) hasn’t really interested them..

      Reply
    • Iceberg

       /  11th May 2016

      “Along with everything else, I don’t know why we’re not talking about the issue at root of all this; the divergence of ethics and law?”

      That’s a topic that covers all areas of human existence. With reference to tax, it’s been discussed and evolved and done to death over centuries.

      The issue at question is why have the opposition and the “independent” media chosen to conspire in a hit job against the Prime Minister. If you want to discuss ethics, start there.

      Reply
      • @ Iceberg – I don’t see the same divergence between the ethical taboo against murder and our homocide laws, or the crime of theft and our laws protecting property?

        Yes, “it’s been discussed and evolved and done to death over centuries” to favour the ruling classes, industrial capitalists and the financial elite.

        However, I largely agree the opposition and the press have dealt with it appallingly. They’ve dealt with it in the way press and politicians more-or-less always do and our political system encourages. Nothing unusual or ‘condemnable’ about it …

        Reply
        • Iceberg

           /  11th May 2016

          “I don’t see the same divergence between the ethical taboo against murder and our homocide laws”

          That’s because you’ve chosen to conflate murder with setting up a legal trust, and you’ve assumed unethical because of the hype from the left.

          Some people will be hiding money in trusts because it’s the proceeds of crime, some people are hiding bodies. We hope that at some point those people and the law intersect. But we don’t publish the name of every person ever spoken to by the Police, because the Police are looking for murderers.

          “to favour the ruling classes, industrial capitalists and the financial elite”

          This argument doesn’t survive any analysis. In NZ alone, hundreds of billions of transfers from the “wealthy” to the poor, have occurred from taxation.

          Reply
    • I’ll tel you why we aren’t talking about “the divergence of ethics and law?” Partisanz. It’s because a ham-fisted, bent on gutter dwelling Opposition decided to make this issue about John Key-as usual. The dog whistling, car chasing carry on mean’t any message they might have had; any possibility of adult conversation around a potentially serious taxation discussion was lost in a discordant cacophony. Public are over it and wait for the polls to show how much.

      Reply
  11. Iceberg

     /  11th May 2016

    “The latest name dump is guilt by association, without context”

    The narrative on this has changed very quickly against RNZ and TV1. Hager had nothing to lose because he was already a bottom feeder. What were they thinking aligning themselves so closely with him?

    Reply
  12. Alan Wilkinson

     /  11th May 2016

    Somethig needs to be seen to being done.

    No, we need an expert, impartial analysis to decide what if anything needs to be done.

    Reply
  13. Brown

     /  11th May 2016

    “… not the spirit, of the law …”

    With tax, which in respect of income tax is simply govt enforced theft in my view, there is no spirit of the law. I’m not inclined to let the thief take my phone as long as he leaves me the TV and see that as some sort of bargain I should be happy with.

    Reply
    • Perhaps it’s a matter of ‘no representation without taxation’ Brown?

      We’ve been through all this before, yet I still fail to see how the “all tax is theft” brigade would have their triple bypass operations, hip replacements and holiday highways funded?

      Reply
      • Alan Wilkinson

         /  11th May 2016

        I already pay my toll road fees happily, PZ. Most “tax is theft” people fund their surgery via medical insurance or self fund. Odd that you pick issues that have straight forward solutions?

        Reply
        • @ Alan – According to this data from 2007 you are part of the 20.8 percent of the population who elect for private healthcare. It’s impossible to know if all these 900,000 or so persons are “tax is theft” people?

          What can we confidently say? Those who pay medical insurance or self-fund are paying twice over? The public system does not provide the speed, ease or quality of service they require? A few kilometres of toll road does not a national highway system and street network make?

          Speculatively what might we say? Perhaps we’re very lucky the insurance and self-fund people cannot withdraw from paying into the public health system? This might lead to a U.S. or South African style system of high-cost, so-called high-quality care for the wealthy and lower-or-poor quality for the rest, presently, it seems, 80% of NZers?

          I saw an item on CNN (I think) over the weekend whereby new statistics reveal ‘medical misadventure’ or hospital errors have possibly become the 3rd most common cause of death in the USA after heart disease and cancer.

          Perhaps we’re lucky we maintain a high quality public health system, since it picks up the pieces when private surgery goes awry, a situation I have personal experience of?

          http://mtanz.org.nz/NZ-Market-The-NZ-Healthcare-Market/Overview-6374.htm

          Reply
          • Alan Wilkinson

             /  11th May 2016

            I still fail to see how the “all tax is theft” brigade would have their triple bypass operations, hip replacements and holiday highways funded?

            They already pay for them via tax, sometimes twice over via private schemes as well. They would simply cut out the middle taxman and pay directly.

            Reply
            • Gezza

               /  11th May 2016

              PZ’s point about when things go wrong & private patients are rushed into the nearest public hospital for critical care, or when the private hospital system simply doesn’t provide the type of treatment required, is a valid one. Depending on the size & range of services of the private hospital, immediate access to a surgeon (or other urgent medical attention) post-op & post discharge, when there are sudden unexpected complications late at night, is also not always possible.

            • Alan Wilkinson

               /  13th May 2016

              You overlook the fact that the present system is the result of the present way of financing it, not of the alternative.

            • Kitty Catkin

               /  13th May 2016

              I think that those with health insurance are a minority. I can never see tax as theft-my hospital care after the hit and run probably cost more than my entire tax paid over my lifetime. If it was done in ACC levies, I’d have been paying these for more than 500 years to pay it back. Theft ? Not from my bank account.

  14. Zedd

     /  11th May 2016

    I see Key sunk to another low by criticising; 3 charities supposedly named in the ‘panama papers’ (Red Cross, Amnesty Int’l & Greenpeace) also a Green MP who has a ‘family trust’ in UK.
    Hardly ‘Hard Core’ drug dealers & gun runners… hiding ‘ill gotten gains’ to avoid tax, WTF

    Shame !!! 😦

    Reply
    • Alan Wilkinson

       /  11th May 2016

      You mean like the lawyers and accountants the Left have been slagging off, Zedd?

      Oh, the schadenfreude.

      Reply
      • Zedd

         /  11th May 2016

        fair point.. ‘schadenfreude’ translation pls

        BUT everytime I see Key, recently I wonder:
        “Would you buy a used car from this man ?” 😀

        Reply
        • Gezza

           /  11th May 2016

          Short definition of ‘schadenfreude’ is taking pleasure from others’ misery Zedd. 😎

          Re: car, is it Ministerial limo and what’s the mileage?

          Reply
    • Pantsdownbrown

       /  11th May 2016

      Ha! I guess you can’t see the irony and hypocrisy of your statement – you also miss the point (at least you are consistent with your posts).

      *The left are justifying the release of all the names & addresses of people/entities with foreign based trusts by saying they are ‘morally’ wrong and in some cases set up for illegal reasons.
      *John Key is saying if that is true then the Red cross, greenpeace and the Green party MP and donor also named in the Panama papers should therefore be under the same suspicion as everybody else.

      John Key doesn’t think that those particular entities are doing anything wrong – he is simply pointing out that under the left’s reasoning they are either ‘morally’ corrupt or undertaking illegal activities. Key is showing how foolish the left is in making assumptions as to why names appear in the Panama papers (to be honest that isn’t difficult).

      You are a typical lefty Zedd – in your eyes the generalised ‘smear’ is only relevant to those people named in the Panama paper that you don’t like.

      Many entities named and shamed in the Panama Papers will be like the Green’s MP with perfectly legitimate reasons for having a foreign based trust – unfortunately unlike her they will not have the ability to defend themselves in the public arena.

      Reply
      • Zedd

         /  11th May 2016

        boo hoo 😦 :/ 🙂 😀

        Reply
        • Gezza

           /  11th May 2016

          Boo hoo 2 who and y? That’s an odd comment Zedd e hoa. o_O

          Reply
          • Zedd

             /  11th May 2016

            “S-T-R-A-N-G-E daze indeed.. most peculiar” :/

            I’m thinkin’ pdb needs to pull ’em back up.. the smell..

            Reply
  15. Hall

     /  11th May 2016

    New Zealand has dropped from the No 1 to No 4 on the corruption index, since the babybomer property investors voted Key into power. Now after these shocking revelations where will NZ sit now? any one who thinks this won’t have an impact on our reputation is just plain ignorant of the facts.

    http://www.transparency.org.nz/docs/2016//CPI-2015-TINZ-Media-Release.pdf

    Reply
    • Alan Wilkinson

       /  11th May 2016

      I looked up the data. The standard error of the estimate is 2.4 so the supposed drop is statistically meaningless.

      Honesty in reporting is obviously not Transparency NZ’s strong point.

      Reply
    • Pantsdownbrown

       /  11th May 2016

      No1 to no4! No4 in a list of 168 countries! Lets get into a panic! Hilarious Oliver!

      (by the way we were #2 last year, not #1).

      Reply
    • Iceberg

       /  11th May 2016

      Halliver, You said that you voted for Key. Hard to keep your stories straight?

      Reply
  16. Pete Kane

     /  11th May 2016

    On the wider ‘scrap’. If you are going to be kicked out of the House – well, maybe worse times for it to happen.
    http://www.inthehouse.co.nz/video/43122

    Reply
  17. Brown

     /  11th May 2016

    “all tax is theft”

    I never said that PZ – clearly legitimate govt activity has to be funded but we need to have a conversation about this that goes beyond hip replacements. The world functioned perfectly nicely, when allowing for the times, before income tax. Govt has its place but its not lord and master of all. Alternatives to income tax are available but they see the govt lose the control they love – its not all about the money.

    Reply
    • Kitty Catkin

       /  13th May 2016

      You said that income tax, at least, is theft.

      Render unto Caesar that which is Caesar’s.

      Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s