Tax haven questions for National

Written By: - Date published: 7:02 am, May 2nd, 2016 - 36 comments
Categories: Abuse of power, accountability, class war, International, john key, national, peter dunne, tax - Tags: , , , , , ,

The tax haven concerns keep coming. An anonymous editorial in the Dom Post:

Taxing questions to answer

Prime Minister John Key’s lawyer, Ken Whitney, runs a company inviting foreigners to put their money in a New Zealand trust. The idea is that it won’t be taxed here, or probably anywhere.

When Inland Revenue outlined concerns with the rise of such trusts, and suggested a review in December 2014, Whitney wrote to their minister. “I have spoken to the Prime Minister about this and he advised that the Government has no plans to change the status of the foreign trust regime.” His request for a meeting was swiftly granted. By May last year, the review had been ditched. No changes were made to the foreign trust rules.

This episode is worrying. Whitney explicitly invoked the prime minister’s support to try to head off a review that might have killed his business. But his industry sorely needed a review – and more.
…
In exchange for being a borderline tax haven, what does New Zealand get? IRD’s guess is $24m a year in fees charged by Whitney’s firm and others – and $3m in tax on that.

That is a bad deal: New Zealand trashes its reputation, and contributes to an international pandemic of tax avoidance by the mega-wealthy, and in return receives a pittance in lawyers’ fees.
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Whitney’s email adds to the murk. It leaves the distinct impression that Key was swayed by a close associate with plenty to lose into dumping an important review.
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As ever with Key, controversy descends and so does a kind of fog. It was an informal gathering. Opponents are making “desperate claims” and can be waved off, he says. But he must be clearer. Did he assure Whitney that the foreign trust regime would not be touched, and if so, why? Is he troubled by his lawyer’s use of his name to stifle a review? And why is he still not acting with urgency to stamp out any suggestion New Zealand has become a hiding hole for wealthy tax evaders?

Why not indeed? Matt Nippert:

World famous, but secret in NZ
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While that email has sparked political debate over the relationship between Key, Whitney and Inland Revenue’s policy-formation, other material in the OIA release provides a bounty of information on the scale, motivations and self-impressions of an industry that has largely operated under the radar.
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New Zealand was said to be competing for this business with similar zero-tax structures in Singapore, Israel, Hong Kong, Malta, the Netherlands and the United Kingdom and United States. But the industry expressed concerns that even a proposal to tinker with tax rules for the sector could gut the industry as clients lose faith and take flight. “This would likely undermine the trust and confidence built up over many years, whereby high wealth families have come to trust New Zealand as a safe country,” the note said of making a proposal public.

No one comes out of this looking good. Andrew Geddis:

According to RNZ news:

The day after Mr Whitney’s email to Mr McClay, the minister’s office contacted Inland Revenue to say the minister had “expressed some concern that one of the options that will be presented in the report to him before the end of the year would be a removal of the foreign trust regime”.

Inland Revenue senior official Carmel Peters responded saying they would “bear this in mind in how we write the report”.

This strikes me as pretty poor on the part of both the Minister’s office and IRD officials. Sure, Ministers in the end get to set Government policy and make decisions about what advice to accept or reject. But this looks like the Minister was telling his officials “I don’t even want to hear about why NZ might want to end this policy, irrespective of the reasons to support it”. And having been told this, the officials simply accepted that the territory was verboten.

Whatever happened to a neutral public service that is tasked with providing “free and frank advice” to Ministers? Maybe Dr Chris Eichbaum has something of a point when he suggested recently that “public servants might just provide ministers with the advice they wanted to hear, rather than what they needed to hear.”

We the people are concerned:

More than half of New Zealanders are worried about the country being a tax haven after the Panama Papers leak, according to a new poll.

As covered yesterday, even Peter Dunne is (belatedly) “extremely concerned”:

Peter Dunne – tax haven label ‘extremely damaging’

Former Revenue Minister Peter Dunne told TV One’s Q+A programme, ‘if the label ‘tax haven’ is being bandied about now as it is, sticks, then that’s extremely damaging. You think of the way we perceive other countries that we’ve historically labelled as tax havens. We don’t view them credibly, and I think that’s the big risk to New Zealand.
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Mr Dunne told the programme, ‘ we’ve got to get to the bottom of is the extent of the activity, what the profile of people using these trusts is, what the implications are for our reputation, and how we work in concert with other countries to make sure, as I say, a robust international system can be developed to combat them.’ …

There’s only one way to get rid of the tax haven label. Stop being a tax haven. Key will be hoping to wait it all out as usual. I hope that our media is up to keeping the spotlight on these issues.

36 comments on “Tax haven questions for National ”

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  1. b waghorn 1
    2 May 2016 at 7:32 am

    “”In exchange for being a borderline tax haven, what does New Zealand get? IRD’s guess is $24m a year in fees charged by Whitney’s firm and others – and $3m in tax on that
    That is a bad deal: New Zealand trashes its reputation, and contributes to an international pandemic of tax avoidance by the mega-wealthy, and in return receives a pittance in lawyers’ fees.”
    This makes it sound like if there was more cash in it it would be worth doing.!!

    • gsays 1.1
      2 May 2016 at 7:42 am

      how sweet, bw.
      you really think these types would pay $3m tax on $24m income?
      it must be early.

      • NZJester 1.1.1
        2 May 2016 at 10:29 am

        Yep, I’m sure they funnel their income into trusts out of New Zealand to make their money as tax free as possible also. Why be involved in helping others dodge tax and not take advantage of it yourself.
        A lot of money will be coming through New Zealand and no country gets to see virtually any of it in tax.
        I bet the National Party however is a recipient of a lot of that un-taxed cash in the form of anonymous donations. They seam to have the biggest pool of anonymous donations being given to them that seams to be bigger than all the other parties anonymous donations combined. We are supposed to have rules to stop large anonymous donations to parties, but National have made sure to get around those rules with loopholes like Cabinet Club etc.

      • b waghorn 1.1.2
        2 May 2016 at 12:26 pm

        Yes that thought had crossed my mind too , but I was feeling generous this morning.

  2. Northsider 2
    2 May 2016 at 8:00 am

    Winebox, Trinity and other artificial constructs have come to light. The IRD has had occasional success in shutting them down.

    The law firms that concocted these tax dodging tools are beavering away daily on helping their clients.

    I’m surprised that anyone is surprised.

    • Skinny 2.1
      2 May 2016 at 9:18 am

      “Winebox, Trinity and other artificial constructs.”

      Which also leads to the corrupt influence that lobbyists are having in our democracy. National Party receive large political donations masked through rotten trusts.

      There was a time the fourth estate would be all over the connection between big business and the Government and political donations. Dedicated teams of investigative journalists to hone in on how this is occuring.

      No way is this acceptable in all facets.

  3. ScottGN 3
    2 May 2016 at 8:03 am

    There’s been a few editorials in the Dom-Post lately which have not reflected very kindly on Mr Key. Not sure what’s going on there?

    • Sabine 3.1
      2 May 2016 at 8:40 am

      It’s the economy stupid. And the economy in NZ has not added a single well paying job, has not build a single affordable house and has not brought on the brighter future for anyone else than maybe Mr. Key the younger.
      When well to do people realize that their own children need to move outta town cause they can’t afford it, when they only see the Grandchildren once a year cause their own kids migrated elsewhere in search of a well paying job and affordable accomodation, one could assume that its Game over.

      I’ll go back to that famous “my first home – my first uperdoer – my first flipper – still not able to buy my first home – TV show. Buy a rotten house for 650k, add 120k of renovations and sell a glorified four bedder (on room under the staircase) for 800.000 and that is considered affordable – btw. that is West Auckland, not innercity, and all that live on TV. Can’t make that shit up ey?

      Eventually the turd that the National Party left in the middle of everyones living room is just to big and to stinky to ignore.

      John Key, leaving turd blossoms everywhere.

      • Ralf Crown 3.1.1
        2 May 2016 at 1:09 pm

        You are right. It has not added many jobs, and that’s where the problem lies. To tinker with tax rules will make clients lose faith and take flight. They are already doing that, and the effects are clear in the trade deficit and diminishing social welfare, and the poverty. Instead the tax and secrecy rules must be strengthened – significantly. People don’t do business with Big Brother drooling over their money. The Panama leak was obviously a USA-NSA hack to raid people belongings. The trust and secrecy regime must go further, to allow the New Zealand taxes for citizens and residents to be lowered, welfare increased, and kiwis respected. The competition, as mentioned, sometimes has 25 years prison for breaching secrecy. In New Zealand money sharks drive up home prices to make a tax free profit. Ban the practice, tax that with 80% tax. Homes are to live in, not speculate and profit on by the few, paid by the many. Home prices must come down 70% so people can afford them. Artificially high real estate prices also drive up rentals, and prices of all goods, and costs for welfare. New Zealand is a clown’s paradise.

        • Stuart Munro 3.1.1.1
          2 May 2016 at 5:09 pm

          The ‘clients’ can go fuck themselves – they’re not citizens and they’re not paying tax. We never needed them before and we don’t need them now. These dubious assets should be seized – job for Winston.

          • Ralf Crown 3.1.1.1.1
            4 May 2016 at 6:36 pm

            Exactly what they are doing, but not in New Zealand. Their money ends up service someone not in New Zealand. Want to keep your beer and benefit, think again.

      • Liberal Realist 3.1.2
        2 May 2016 at 6:58 pm

        Eventually the turd that the National Party left in the middle of everyones living room is just to big and to stinky to ignore.

        John Key, leaving turd blossoms everywhere.

        Brilliant, you gave me a good laugh out loud! +100

        On a serious note, the harsh reality is National are leaving an indelible stain on NZ society.

    • ianmac 3.2
      2 May 2016 at 8:57 am

      I think that Key recently had a crack at the Dom saying it is no wonder no bothers to read that newspaper. Must be miffed?

    • Rosie 3.3
      2 May 2016 at 10:00 am

      Yes, quite surprising to open the weekend Dom Post, see the tax haven editorial, Duncan Garners housing article on the opposite page (which one commenter pointed out yesterday was a bit hypocritical seeing as Garner once criticised Labour for suggesting a CGT, and now asks why haven’t we got one) and even Tracy Watkins being vaguely and politely critical in her column about housing, right below Garner’s article.

      3 articles critical of Key and the Government over 2 pages of the Dom Post. Unheard of!

  4. ianmac 4
    2 May 2016 at 9:03 am

    The honourable Key this morning on Morning Report, told Guyon that Whitney misrepresented Keys words. There you are. Not quite Labour’s fault just Ken Whitney’s. Expendable?
    http://www.radionz.co.nz/national/programmes/morningreport/audio/201799076/key-rejects-allegations-his-lawyer-influenced-trust-decision

    • Northsider 4.1
      2 May 2016 at 9:07 am

      Yeah right. $500 an hour lawyers “mishear” and “mis-speak”.
      Key is a liar.

    • wyndham 4.2
      2 May 2016 at 9:23 am

      Well, at least Helen Clark isn’t to blame for this one ! But Whitney appears to have been encouraged to swallow a rat for his client.

      • Psycho Milt 4.2.1
        2 May 2016 at 9:46 am

        He left a paper trail pointing to his patron, which is very bad form. He can count himself lucky – if his patron was Putin he’d be dead or in jail for such an egregious failure.

    • Draco T Bastard 4.3
      2 May 2016 at 1:30 pm

      It’s typical of the party for People Who Take Personal Responsibility when caught out doing something dodgy they immediately Blame Someone Else.

    • rod 4.4
      2 May 2016 at 4:01 pm

      I wonder if Key will sack his lawyer for misrepresenting his words? I expect he will be relaxed about it.

  5. One Anonymous Bloke 5
    2 May 2016 at 9:08 am

    I’d rather people said “tax haven” than “money laundering”.

    “Come on down to Shonky’s Cash Washing Services. Hello Mr. Terrorist, I recommend our Godfather package.”

    • Psycho Milt 5.1
      2 May 2016 at 9:38 am

      Me too, but people are entitled to say both. A service in which foreigners can put money into NZ trusts without having either their own country’s officials or NZ’s know who they are is effectively a money-laundering service.

      • One Anonymous Bloke 5.1.1
        2 May 2016 at 9:59 am

        Agreed. I think it’s interesting that people are focussing more on the tax angle than the criminal.

    • NZJester 5.2
      2 May 2016 at 10:09 am

      It is worse than just Terrorists. The sort of people that have have been talked about in the Panama Papers hiding money transactions in these trusts are also Pedophile child sex traffickers, those helping dictators to rob their countries blind and strip them off assets and black market dealers supplying arms, ammunition, deadly chemical etc. to those embargoed states using them to commit war crimes as well as to terrorists.

      Remember when Key hammered on about Labour supporting pedophiles and rapists in Australian detention centers that turned out to not be true? Well It turns out his government are the real party supporting pedophiles and rapists and worse!

      • One Anonymous Bloke 5.2.1
        2 May 2016 at 10:18 am

        Mr. Key’s office released the following statement:

        “We believe the correct value of child slaves, per tonne, should be left to the market”.

  6. AmaKiwi 6
    2 May 2016 at 9:41 am

    The first requirement of democracy is transparency.

    Our legal system must be changed to guarantee politicians cannot conceal their work related communications. No delaying tactics. No redacting. No fees. No b.s.

    “Here’s a list of documents I want. I’ll be back to collect them this afternoon.”

  7. North 7
    2 May 2016 at 11:12 am

    Fake Man Key didn’t used to regularly come over as the spoilt son of a fabulously wealthy father. He certainly does now though. Very second generation. Increasingly callow displays of entitlement, arrogance, and wilful ignorance.

    The underlings, as in Whitney, always to blame. It is surely unprecedented in our entire history that the high office of prime minister should sheet home to an incumbent absolutely no responsibility for anything.

  8. ianmac 8
    2 May 2016 at 11:45 am

    Matthew said this morning that it is typical Key. He says what his audience (lawyer) wants to hear at that moment. But as it is not based on rigorous research and without conviction, the supporting voters are getting a bit tired/frustrated with his style.
    Then of course Key retracts/mis-speaks/circles/denies etc etc.

  9. S-hell 9
    2 May 2016 at 12:11 pm

    Great to see the rats running for cover, while blaming someone else, oh, again. With the links to ‘dirty’ money garnered from ‘illegal’ activities, now knowlingly hitched to NZ’s reputation, surely it is time to freeze the trusts while there is an enquiry into where it is from, and then released back to whomever it has been fleeced from. Some form of restorative justice may redeem us as a country that ‘cares’ about the human rights of others. Will Dunne support the opposition parties to do such a thing, or could the Ministry of Foreign Affairs CEO just do it I wonder?

  10. Smilin 10
    2 May 2016 at 3:28 pm

    SMOKE AND MIRRORS more like where there’s smoke there’s fire
    Just like all the other Key histories ,a whole lot of arrows pointing here here and here but too numerous to get anything on – no time, that’s what we are paying for, diversion ,but not the type you get in court
    And so it goes, next the Ugly truth about the Kermadecs,what stories will come from him when he’s confronted ?

  11. peterlepaysan 11
    2 May 2016 at 6:15 pm

    I am fascinated to learn that J Key has total recall of a conversation he had two years ago. An amazing memory or else he has had very very few conversations in the last two years. I think I feel a “Yeah right” moment coming on.

  12. appleboy 12
    2 May 2016 at 8:08 pm

    Where’s BM to defend his masters corruption? BM is rarely silent and usually manages to be in on every thread damaging to key with some alternate universe perspective .

    • Whateva next? 12.1
      3 May 2016 at 7:12 am

      He must have annual leave, after all he’s been trolling without a break for……..? Months?