Granny Herald: Cunliffe wrong to be right

Written By: - Date published: 8:35 am, April 2nd, 2013 - 19 comments
Categories: david cunliffe, tax - Tags:

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 Granny says it happens because the law’s outdated and, from that, concludes Cunliffe needs to pull his head in.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.

19 comments on “Granny Herald: Cunliffe wrong to be right”

  1. Descendant Of Sssmith 1

    One of the reasons I would tax business at a gross rate same as employees.

    It wouldn’t be difficult to apply to all electronic purchases cause you are not having to piss around with expenses and profit.

    Leave those aspects between the company and the owners / shareholders.

    You sell goods in NZ you pay tax in NZ.

  2. Socialist Paddy 2

    What the? Politicians should pull their head in and accept the law the way it is even though it allows multinationals to rip us off and not pay tax for the privilege of doing so? I guess it is not as if members of Parliament can do stuff like change the law … ooh wait …

    It is also not as if Apple’s margins are tight. I hear they make about a third in instant profit every time they sell an iPod.

    And I agree with you Eddie about the Herald having a whack at politicians like Cunliffe and Norman. They are obviously seen to be threats and need to be taken down at any chance by that mouthpiece of the rich and powerful.

  3. logie97 3

    Words from the article attacking Cunliffe.
    opportunist, simplistic, populist (x2), outburst – methinks this editorial is written by someone fearful of Cunliffe.

    • Draco T Bastard 3.1

      Pretty much any dyed in blue National supporter then.

    • Joe Bloggs 3.2

      oooops spot the typo…

      here I’ll correct it for you:

      opportunist, simplistic, populist (x2), outburst – methinks this editorial is written by someone dismissive of Cunliffe and his crackpot outburst.

  4. DH 4

    It is a rather strangely confused & contradictory piece. This bit here is odd….

    “The activities of technology companies could, therefore, be likened to exporters of goods who traded with New Zealand, rather than in New Zealand.”

    If Google & Apple etc were selling direct to the consumer from overseas that argument might have some merit. But if that were the case they’d pay no tax at all in NZ and they do pay tax so they must be domiciled and can’t be likened to exporters. A local NZ company should be paying tax commensurate with the profit that their turnover could be reasonably expected to generate.

    A comparison can be made with the likes of McDonalds. Their overseas head office charges royalties too but since they franchise their outlets to local NZ operators the royalties have be low enough for the businesses to make an NZ sized profit. No-one complains about McDs because the franchises do pay a reasonable amount of tax here.

    Seems more like an opportunistic dig at Cunliffe than a reasoned editorial.

  5. Ad 5

    We really are a country ruled by just a handful of companies, and we really are being driven into the dirt face down because we have so few unions to protect us from anything. If Key could stick up for regions and workers like he sticks up for multinationals and bails them out, we would actually feel prouder living here.

    Good God if Labour could allow Cunliffe to stick up for the great unwashed masses as well, by kicking the multinationals hard and often. The last guy to understand that patriotism and protection and economic management can be coherent in one sentence was … Winston Peters. And that 6% never seems to go to Labour, though it could. And so we have a 2014 scenario that requires the Patron Saint of populism to work.

    The Herald is in a panic of course as its owners keen stripping profits from within New Zealand to prop up a dying media empire. Mere self interest from overseas owners.

    Can’t even remember the last time the NZHerald attacked a Labour MP on a straight policy issue like this. Go hard at them Cunliffe.

  6. saarbo 6

    “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”

    I’m glad you have posted this, I couldnt understand where the hell the NZ Herald was coming from here…weird. Clearly they have lost the plot.

    There is an absolute case for taxing their profits in NZ, with a company like Apple selling Itunes, I suspect Revenue in NZ almost = Profits in NZ. Tax the lot…change the laws to make it happen …is it Transfer Pricing or something like that…make it happen.

  7. Elizabeth Bourchier 7

    Apple has US$100BILLION in cash outside of the USA.
    This is profit from its overseas operations.
    It paid damn all TAX in the overseas territories and defers taking the cash into the USA to defer paying TAX there also.

    Cunliffe is on the money.

    I’m delighted the Herald is slagging him.
    Cunliffe should wear it like a badge of honour.

  8. BillODrees 8

    There are 40 comments on the Herald editorial nearly all supporting Cunliffe and taking the piss out of the Herald.

    Wow, someone up there sees Cunliffe as a threat to current consensus.

    Welcome back from the backbenches David.

  9. xtasy 9

    What is this by “Granny Herald”? Plain tall poppy hatred! When a smart politician comes and says something, especially from a quarter the right leaning editors, cosy with Key and gang, hate, then it gets shot down instantly.

    That is still NZ, the good ol, of sorts, but they shoot too much into their own foots, that is the damned problem.

    I give Cunliffe credit for having travelled Scandinavian countries last year, to learn and see how things can be done better, to combine good business, and enterprising practice, with social conscience and practice.

    Now that is what Key and consorts HATE.

    They adhere to right wing, old fashioned anglo saxon hate economics, divide and rule tactics and the likes, so no wonder their editorial mates in the media (and they are everywhere, I am considering to collate info on this, suggestion to Karol also) are joining forces yet again to “defend” the “brand Key””. NZ is run like a kind of soft dictatorship now, as National has put so many key personnel in key positions in government, media and business cooperation now.

    No wonder we get the “news” that we get fed every night and day.

    SICK!

  10. tracey 10

    Remember when the right wing bloggers were urging labour to appoint shearer not cunliffe? God they must laugh at how easy it all is.

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