Sometimes, I wonder where Granny Herald gets her crack from. It’s clearly strong stuff. Like when she runs an editorial soundly condemning an opposition MP for doing something that the same editorial admits is justified. Today, Cunliffe gets an earful for daring to suggest that IT multi-nationals are ripping us off. Granny says it happens because the law’s outdated and, from that, concludes Cunliffe needs to pull his head in. What about supporting updates to the law instead?
Companies should pay tax in the countries where they operate. Indeed, that is their responsibility. But the current international and domestic tax rules were created in a world of factories and farms, not that of e-commerce where companies can operate virtually with a limited physical presence. The source of the current problem is that international tax rules have not kept pace with this change. So it is hardly surprising that sophisticated multinationals have chosen to take advantage of the law as it is, not as it ideally might be. They have, for example, become expert in shifting profits between their firms based in different countries.
So, Granny reckons that multi-nats are exploiting loopholes in the law to avoid their tax responsibilities.
None of this is illegal.
Um, no-one said it was. That’s the thing about loopholes – they’re legal but unjust.
But that has not deterred populist politicians.
Politicians seeking to redress flaws in the law? Whoever heard of such a thing?!? The opportunistic scoundrel. It’s almost like we purposely created a political system whereby politicians would be incentivised to point out problems and offer solutions to fixing them in the hope that they would win support, and then some crazy bastard went and did exactly that.
Multinationals like Facebook, Starbucks and Google have all faced similar criticism, not least in Britain and Australia, for structuring their global businesses to minimise tax payments. This has prompted the OECD to call for a worldwide crackdown on such behaviour. But it knows, as surely does Mr Cunliffe, that the situation is about far more than simplistic accusations.
Granny does realise that a politician can depend on getting about 25 words into a story that they break, eh? All he’s got the media space to do is point out the basic wrong and say it can be fixed. Granny wants to hear a detailed discussion of multi-national tax law from David Cunliffe? Hmm…. if only Granny had some forum for that kind of thing – why not invite him to write an op-ed?
The editorial then does an about face and says there might not be any tax avoidance taking place because maybe the IT giants aren’t earning much money here
That situation would change only if Facebook, for example, employed a lot of people in New Zealand and gained large sums from local advertisers, offsetting that by payments for services of debatable value to their parent or sibling companies. But that does not appear to be the case
Um. Granny who fucken stoner. That was precisely Cunliffe’s point. Apple and the rest are making shitloads of money here and paying bugger all tax (yes, we tax profits, not revenue but if you’re only paying 0.4% of revenue in tax, that suggests you’re making $1.2 in profits for every $100 of sales – and we know IT companies are much more profitable than that).
Come on, Granny. There’s standing up for the interest of the capitalist elite like you always do, and then there’s making a fool of yourself in your own editorial page. Get it together.
Or, maybe, I’m being too harsh. Maybe Granny is doing her job for New Zealand’s capitalist elite – as she did last week in a similarly nonsensical editorial attacking Russel Norman for being right: identifying threats from the Left and whacking them with whatever she can, however incoherent that might be.