- Date published:
9:13 am, April 5th, 2016 - 42 comments
Categories: Globalisation, International, john key, national, Politics, same old national, slippery, tax - Tags: Deborah Russell, panama papers, tax haven
You can bet that deep in the bowels of National Party HQ the research unit and the party’s pollster are urgently trying to work out what lines they should use concerning the Panama Papers leak. An urgent call may have been put into Crosby Textor although they may have an urgent clean up job that takes priority. The party’s pollster has not blogged on the issue even though it has dominated the media for the past 24 hours. Other Ministers are strangely silent. No doubt polling is being conducted and the focus groups are being assembled to work out what should be said.
If you had the misfortune of watching the video of yesterday’s post cabinet press conference you would have seen these points made again and again and again and again.
But this is classical Key. He stands up and with complete confidence and assurance gives an emphatic description of the current situation.
The only problem is that his lines do not reflect reality.
While the tax system has been in place since 1988 it has not been a significant problem until the last few years. And recent events would cause a responsible government to review current laws. In an article posted in October last year Gareth Vaughan wondered if New Zealand was becoming a paradise for money launderers. His article said this:
The NZ Police Financial Intelligence Unit (FIU) details suspicious transaction reports filed with it under the Anti-Money Laundering and Countering the Financing of Terrorism Act (AML/CFT Act) by the likes of financial institutions and casinos. Although at around 12,000 the volume of these reports didn’t budge much in 2014-15 from 2013-14, the value of transactions in them shot up to $8.6 billion from $3.4 billion. …
Just what the FIU does with those suspicious transaction reports once it gets them isn’t completely clear. A Police spokeswoman said my question asking this was being treated as a request under the Official Information Act. We have, however, been told by Justice Minister Amy Adams that between December 2013 and May 2015, suspicious transaction reports contributed to four police operations in NZ that resulted in 30 people being arrested and about $220 million worth of drugs and assets seized.
Here’s hoping that $8.6 billion figure paints an accurate picture of the parts of our economy that are caught by the AML/CFT Act. But even if it does it’s merely the low hanging fruit. Because tempting swathes of the economy are excluded from the AML/CFT Act, crucially including real estate. Also excluded is the eighth wonder of the world, the offshore operating NZ registered – but not regulated – financial service provider.
Of course if you want New Zealand to become the Switzerland of the Southern Hemisphere and a refuge for the rich and powerful you would turn a blind eye on the source of the funds entering the country.
Has the OECD given New Zealand’s tax system a clean bill of health? Well sort of in that it is better than some of the really notorious tax havens that had stronger secrecy provisions. But the IRD warned in 2013 that our foreign trust tax regime posed a reputational risk. This is hardly a clean bill of health when your own tax entity says that there is a problem.
And the full disclosure requirement? As pointed out by Deborah Russell all that has to be disclosed is the name of the trust, the name of the trustees and if the settlor lives in Australia. Details of the beneficiaries and the assets owned by the trust need not be disclosed.
So the interim answers from Key clearly are just spin. I would expect there to be a gradual change in position as the polling results come in. And I would not rule out a law change if the pressure becomes too much.