Hard News: Forgetting what we didn't know
82 Responses
First ←Older Page 1 2 3 4 Newer→ Last
-
Tom Johnson, in reply to
That a difference of opinion over a definition
Oh my god. Who are you trying to fool? That is a kiwiblog comment. Grow up.
Look at the issue, it's a clear problem. Grow up , stop trying to convince yourself of the innocence of the market. It needs overview and regulation. So fucking obvious . Yes, Matthew unfortunately bad folk are out there. I know its hard to believe they are not all on the dole and some wear nice ties but yes, it's a complicated world out there. And you do know how dirty money can get because you nearly fell out with the blue flag over a contract from memory.
C'mon, get your intellectual pants on and stop playing a game of spin and bluster.
-
Deborah, in reply to
Well, the OECD would say that, wouldn’t they, when it’s one of their own members. :-)
Per my post at The Spinoff, it might depend on what you think a tax haven is, and whether you think form or substance matters more.
Foreign trusts 101: a plain English introduction amid the Panama Paper haze
Are the foreign trust rules a tax haven? That probably depends on what you think a tax haven is. If you think that a tax haven is a country that explicitly sets out to create a benign tax system and enable people to hide assets and minimise taxation, then no, we’re not a tax haven. On the other hand, if you think that intent doesn’t matter, and what really counts is the way the tax system and secrecy rules operate in practice to allow people to avoid and evade tax, then we are a tax haven.
For those that doubt that we are a tax haven, what other explanation is there for New Zealand firms marketing New Zealand as a great place to pay no tax and be confidential about it?
-
izogi, in reply to
Mainly since we introduced LookThroughCompanies (LTC) in 2010.
..which were created with the Taxation (GST and Remedial Matters) Bill 2010. It stated an outright intention of seeking to remove tax avoidance opportunities, and didn't spend such a lengthy time in the process. It was introduced 5th August, with just 3 weeks available for submissions between First and Second readings, and was passed on 9th December.
The key here, though, seems to be that Look-Through Companies didn't even exist in the Bill until SOP 187 made the change with its release on Tuesday 7th December, two days before the Bill passed its Third Reading to gain Royal Assent.
Labour (notably David Cunliffe, Stuart Nash, Trevor Mallard and Pete Hodgson) made a big deal about the sudden injection of a 77 page SOP into a 57 page Bill during the Third Reading with barely any time to study it under urgency, including raising particular concerns about Look-Through companies and the huge changes to tax legislation this entailed. Peter Dunne defended the process, as Minister of Revenue.
Then it was finally passed 66 to 47, thanks to National, ACT, Maori and United Future.
In essence, this change to introduce look-through companies was part of the government's gratuitous obsession of avoiding process via urgency in the name of "getting stuff done", that received criticism at the time?
Yeah, okay.
-
Deborah, in reply to
Hmmm... the LTC model fixed some serious problems with their predecessor entities, LAQCs (Loss Attributing Qualifying Companies). So yes, putting them through in a SOP was problematic, but they were designed to address a serious problem, and they have largely done so.
I don't think there's any reason at all to read a nefarious motive into this, 'though I think it would be fair enough to wonder why government didn't give the problem greater priority earlier on, so that IRD had the opportunity to run a full policy development and law drafting process.
-
izogi, in reply to
Hi Deborah. I'm not meaning to suggest anything malicious or that LTCs are inherently bad, but the government of that day was already getting major criticism for mis-using urgency over and over again, resulting in big changes that had almost no time to receive real scrutiny and consideration of the implications. There's no guarantee that the implications of that change in combination with foreign trusts would have been picked up with a better process, but the chances of that are greatly reduced when there's virtually no time between showing everyone and fully passing it into law.
-
Key said he had been looking into the Panama papers himself.
Could someone ask him why he entered Amnesty International and Red Cross into the search box.
Ta.
-
Deborah, in reply to
I don't know whether the link through to foreign trusts would have been regarded as a particular problem at the time. I think it may well have been just something that was seen as keeping our entire system consistent. (FTR, I tend to regard consistency across the system as a virtue rather than a vice, because it usually helps to eliminate loopholes.)
One of the defences the government has been running is that the original foreign trusts legislation come in under Labour. But I tend to regard law as a conversation and a response to circumstances. Problems only become apparent over time, economic or other circumstances change, and the law no longer fits, or the way it works creates problems in a changed environment. So we need to adjust our law. This is all part of the ordinary process of doing democracy.
For a nice example of this, think about how we need to rework copyright law to deal with the internet, which is after all, still only about quarter of a century old (in the sense of starting to be widely available and used commercially.)
But the problem with foreign trusts and LTCs is clearly there now, so fixing it would be a good idea.
-
One of the defences the government has been running is that the original foreign trusts legislation come in under Labour. But I tend to regard law as a conversation and a response to circumstances. Problems only become apparent over time, economic or other circumstances change, and the law no longer fits, or the way it works creates problems in a changed environment. So we need to adjust our law. This is all part of the ordinary process of doing democracy.
Yes, remember the Labour Govt, Helen style went through great pains to show it was business friendly . They did this in order to water down National spin criticism that Labour inherently impedes business.
Now it is very important that National do their job and keep their supposedly superior business eyes on best practise/dodgy money deals. Especially now it's 8 years down the track, you can't spin this onto an old Government that has long been out of office. Key is very naughty to do that and he knows that. It's all a bit tee hee to him, issue dodging,
-
Rich of Observationz, in reply to
As I understand it, and IANATA, the LTC regime allows a person to get the benefits of both personal and company status when paying tax.
That is something you can't do in most overseas jurisdictions, where you either have a company (which pays tax on retained profits and capital gains) or hold your assets/business in person. Doing this means that business and asset owners pay less tax - obviously this is at the expense of ordinary wage earners, who pay more.
The other effect of being unaligned with most other countries tax systems (no capital gains tax, no inheritance tax, favourable treatment of trusts and LTCs) is that it makes sense for foreigners to engineer their affairs such that capital tax liabilities show up in NZ (at zero) - combine that with other jurisdictions with zero company tax, and it's possible to minimise tax bills to near nothing (once you can afford the accountancy fees).
-
izogi, in reply to
Hi Deborah.
But the problem with foreign trusts and LTCs is clearly there now, so fixing it would be a good idea.
I agree.
-
Sacha, in reply to
Could someone ask him why he entered Amnesty International and Red Cross into the search box.
CrosbyTextor would have fed him that line from the last time in was used in the UK in 2013.
-
Kumara Republic, in reply to
Whatever the solution, Blairism looks like a product of its time with each passing year.
-
Analysis of the database will take time and given the NZ crew only just got full access – as per the attached image – a simple high level search on New Zealand shows links Offshore Entities (16) Officers (58) Intermediaries (5) Addresses (391). The real stories will be a bit more hidden than that and there are other searches to be made including the ones on other Pacific Islands as mentioned earlier (by others.)
What I’m concerned about is the reputational damage to NZ business. When 300 economists can sign their names to say that essentially the secret trust business is one that should be controlled or shut down then NZ has to take notice.
Tax havens have no economic justification, say top economists
Regardless of what the NZ trusts actually do – they are seen to facilitate dodgy practices in other places. If NZ ever wants to collect tax from the bigger trans national companies who are “legitimately” not paying tax in NZ, UK, U.S or most places then we need to have a clean out.
If 35 or so other nations can commit to changing this then New Zealand should be part of that. Ironically Australia has tightened up the rules on transnationals and is doing the same on the #panamapapers.
Panama Papers: 35 countries agree on joint compliance action
Like or not these wider issues are connected and that could be part of the reason for some of the denial that is coming from National party hacks.
Overseas territories resist calls for concessions to end tax secrecy
Of course they will. The most simple fix that can be put in place fairly quickly is an inter country data sharing arrangement so lets join other governments and do that.
If New Zealand is as squeaky clean as National party politicians think then they should show a leadership position and put some controls in place. Make that trusts regime more transparent to other governments and stop facilitating questionable business.
As for Garner and TV in New Zealand. Have stopped watching long ago.
Also don’t look now but a proposed merger between NZME & Fairfax – two basket case businesses with a failing business model in a sunset industry will be somewhat distracted by the blood on the streets if allowed to merge as they cull their head count. That is a greater threat to media than anything else. ( but off topic so)
-
it appears that even saying the words “tax haven” was legally perilous four years ago.
I wonder if 'Niue World Order' would work instead?
;- ) -
seems like the solution is for the countries come up with an agreement good transparency rules for international transactions .... and to unconditionally tax all transactions through countries that don't join the agreement as "income"
-
Amanda Wreckonwith, in reply to
CrosbyTextor would have fed him that line from the last time in was used in the UK in 2013.
Oh, I know all the history.
I just think that someone should put him on the spot about his personal decision to make such an odd search selection. I can’t think of anyone else who would make those choices.
Unless they were told to search for such organisations… -
Tom Johnson, in reply to
Niue World Order, so good, so good.
-
That Deborah, Nicky and Andrea Vance think it does is interesting but not decisive.
No. You'd have to look at the reasons they give. Deborah is very clear. You might also take into account that our trust regime was being questioned by other countries' tax depts and our own IRD.
Having done your homework - do you think we qualify as a tax haven? Or were we simply the unwitting dupes of clever Panamanian lawyers? -
Moz, in reply to
do you think we qualify as a tax haven? Or were we simply the unwitting dupes of clever Panamanian lawyers?
It doesn't have to be just one of those, and there are other options. Key, for example, might be suffering Collins Syndrome or have whatever his "highly ethical lawyer" has (is this another case of "99% of lawyers giving the rest a bad name"?)
I'm inclined to think it looked like a good idea at the time, turned out to be extremely useful once the then-new government came in, and since no-one was jumping up and down... no problem!
-
Andre, in reply to
I've heard Fairfax have made all of their sub-editors redundant now, with journalists required to sub their own stories and Editors the last line of proofing.
-
Sacha, in reply to
a leadership position
middle word does not compute
-
Marc C, in reply to
Shocking, Maori Party voting in favour of LTCs after Nats used a lengthy SOP to amend the Bill at extreme short notice. This tells me that they need to learn more and do more research about taxation legislation and practice, the folks doing research for Maori Party.
They were used, I fear, to pass legislation, not realising the likely consequences.
But then again, I wonder whether other MPs from other parties always know what they are voting for or against, following the party line may even simply force them to be ignorant and careless.
Laws always have some consequences that may not be foreseen, and hence it is necessary to avoid rushing through any significant legislative changes, which the Nats have done very often, to the detriment of many.
-
Russell Brown, in reply to
Oh, I know all the history.
I just think that someone should put him on the spot about his personal decision to make such an odd search selection. I can’t think of anyone else who would make those choices.
Unless they were told to search for such organisations…Key wouldn't have done the searching. It'll be staff.
-
Tom Johnson, in reply to
F>>K left and right on this one, this is a failure of governance issue. I’m sick of bad governance being so frequent that it's accepted as the norm. All power to the new breed of journalists coming up, the ones who are really fucking good at it.
National have delivered very poor governance because they don’t do the homework of governance and they don’t do the homework of governance because they are not very good at it.
-
izogi, in reply to
I think it was just part of a larger pattern of clumsy process. This Bill was just one of many that had similar treatment. When even DPF agrees there's been a problem with National's process, it's worth a glance.
I'd agree with Deborah that the issue wouldn't necessarily have been detected with lengthier time to consider, and that it's at least as significant that the government then chose to ignore symptoms of a likely problem when they were presented. That said, the process which led to this stuff getting legislated to begin with really stinks.
Post your response…
This topic is closed.