Interesting article in the Weekend Herald:
Super-rich tax probes net $500m
New Zealand’s richest people have paid more than $500 million in extra tax after an Inland Revenue crackdown.
The unit was set up in 2003 and has collected $467 million so far. This year the total is expected to pass $500 million, so that “headline” figure is over a 10 year period, not as significant as it sounds.
IRD investigators have unravelled the complex tax affairs of individuals who have, or control, more than $50 million each, to ensure they pay their fair share of tax. New Zealand has 250 “high-wealth individuals” who made their fortunes from property development, investment, retail, agriculture, tourism and manufacturing.
They have 7500 associated entities – such as companies and trusts – which can be used to avoid paying tax. One had a web of 197 entities. “Aggressive tax arrangements can include the use of tax havens, transferring profits to associated offshore entities, using trusts to divert taxable income, and showing lifestyle and luxury assets as business assets,” said IRD investigations manager Stuart Duff. …
“In most cases they do register, file and pay on time, but the complex nature of their business structures and entities means accurate reporting can be an issue.”
There can be no valid reason for a single person to have 197 legal entities shuffling money, the only (invalid) reason is tax evasion. Labour started this project in 2003, the IRD now has 10 years worth of data and understanding. It is time for Phase 2. Build on this foundation and change the law to close the loopholes. Set a legal maximum on the number of financial entities a person can own. Set clear and transparent accounting rules that let us see where the money goes. Crack down harder on tax evasion. (No it’s not “the politics of envy” to expect everyone to pay their legal share, and if you want to make that argument then be prepared to defend “the politics of greed”).
The ball is now in the Nats’ court. They like bang on about benefit fraud, are they just as keen to go after the super-rich? (And the “family trusts”, also discussed in the Herald piece?) Time will tell I guess, but I’m not holding my breath.