Whitewash a certainty in tax haven review

Written By: - Date published: 12:31 pm, April 12th, 2016 - 77 comments
Categories: john key, national, tax - Tags: ,

John Key’s solution to the exposure of his ludicrous claims that New Zealand has full disclosure on foreign trusts nor is tax haven, is to appoint an expert in tax avoidance as the so-called “independent expert” to review the laws.

As fallout from the “Panama Papers” has escalated and the prime minister’s claims are seen to be palpably untenable, Key has resorted to the age-old political fallback with such backdowns – appoint a tame mate who is guaranteed to find in favour.

John Shewan, former head of PricewaterhouseCoopers and past member of the Tax Working Group, has in recent years been on the wrong side of two of New Zealand’s most notorious and significant tax avoidance cases.

And his views and that of the ACT party on tax dovetail in almost every important respect.

Shewan has over the years taken full advantage of New Zealand’s lazy journalists, making himself accessible to a media that typically pursues the easiest option, so his views have been prominent on almost every debate on tax, and he invariably opines that low, or no tax, is best.

In the biggest tax avoidance case in New Zealand history, where the four main Australian banks agreed on Christmas Eve of 2009 to settle $2.2 billion with the IRD, Shewan was adviser for Westpac.

The case was, according to Patrick Smellie, “notable for advice from a PwC senior partner at the time, John Shewan, that his client, Westpac, should be seen to be paying enough tax to satisfy public expectations”.

He suggested that tax should be about 15 percent of annual profits, compared with the then corporate tax rate of 30 percent. Westpac actually chose to pay a rate of just 6.5 percent.

Despite, losing the case, Shewan was still extremely good value for Westpac, as the settlement was the equivalent to only about 80 percent of the unpaid tax and interest in dispute, and the banks avoided potential large penalties, which most taxpayers have to pay when they are found to have been avoiding tax.

A string of other Australian-owned companies, including former KiwiRail owner Toll Holdings, Telstra and former TV3 owner Ironbridge Capital, used similar tax-minimising tricks to bilk IRD in the first half of the 2000s.

Shewan and PwC may or may not have worked for any of these other companies but it is certain that tax avoidance schemes such as these were dreamed up and designed by the large accounting firms such as PwC and rivals like KPMG.

One party who has had dealings with Shewan over the years, told The Standard: “If you look at Shewan’s skills, unquestionably he would be one of the country’s foremost tax experts. There would be few people who would challenge him.”

“Whether or not he designed such schemes, I don’t know. He comes from a chartered accounting tax background, and the raison d’etre of most such tax practitioners is usually to find ways to allow their clients to pay less tax, albeit in a compliant manner.

“This in turn appears to have been part of the National Party’s agenda whereby they have looked for ways to lower personal tax rates.”

In the second landmark tax case where he was also on the wrong side, Shewan came in for stinging criticism from the Supreme Court, also won by IRD.

The Supreme Court unanimously ruled Christchurch orthopaedic surgeons Ian Penny and Gary Hooper avoided tax by using company structures and family trusts to artificially lower their salaries and avoid paying the top personal income tax rate.

The case was a precedent one for personal taxation as the structure was copied by many others.

The Supreme Court “put to one side” Shewan’s evidence presented on behalf of Penny and Hooper, as it said he expressed views on legal issues that shouldn’t have been given by an expert tax witness.

“It is undesirable and wasteful of the time and effort of both parties when such material appears in expert briefs of evidence,” the court said.

New Zealand First leader Winston Peters, who cut his political teeth on the “Wine Box” tax avoidance scandal, said Shewan’s involvement in these high-profile tax cases meant he is an unsuitable “soft option” as an expert.

On retiring from PwC, Shewan made clear his views on progressive tax rates when he said high taxes on personal incomes were the most damaging to the economy for growth and jobs. This statement is erroneous as was shown in a famous OECD study which showed that countries with robust progressive taxes perform better in both growth and jobs over the long term.

When National announced its irresponsible 2010 tax cuts, Shewan’s comment was that he was optimistic New Zealand would have a top tax rate of 25 percent within three years.

Shewan was a key member of the 2001 McLeod tax review that came up with the radical recommendation of a “carefully targeted” reduction in the company tax rate to between 15 and 20 percent for foreign companies investing here.

“We want New Zealand to stand out from the crowd,” the review said.

Shewan is a director on a number of boards. In 2013, then Education Minister John Banks, appointed him deputy chair of the Charter Schools Authorising Board – the ACT Party initiative on Charter Schools. The Chair was then ACT Party president Catherine Isaac.

He is on the board of the New Zealand arm of the China Construction Bank and Munich Reinsurance Company of Australasia as well as the Fonterra Shareholders Fund.

All in all, if you add up Shewan’s credentials, Key has done a fine job in setting up this independent review for a whitewash.

(Simon Louisson formerly worked for The Wall Street Journal, NZPA, Reuters and was most recently a political and media adviser to the Green Party)

77 comments on “Whitewash a certainty in tax haven review ”

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  1. The Gormless Fool formerly known as Oleolebiscuitbarrell 1
    12 April 2016 at 12:38 pm

    What we really need to do this review properly is someone who knows nothing about tax.

    • RedLogix 1.1
      12 April 2016 at 1:07 pm

      Given how badly all the ‘experts’ have fucked it up; that’s probably a really good idea Ole.

    • AB 1.2
      12 April 2016 at 1:21 pm

      What we need is someone who is not part of the tax avoidance industry, and someone of ethical standing in matters of taxation justice. That ain’t Shewan.

      • Rocco Siffredi 1.2.1
        12 April 2016 at 1:30 pm

        You need Richard Murphy, he’s an expert in taxation who knows nothing at all about taxation.

        • AB 1.2.1.1
          13 April 2016 at 9:52 am

          See Draco at 1.4.
          Moral compass essential. Technical knowledge of taxation not so much.

    • Macro 1.3
      12 April 2016 at 1:42 pm

      That is exactly what should be done! The only credential should be that the person selected is not a gormless fool!

    • Draco T Bastard 1.4
      12 April 2016 at 3:49 pm

      Yes, that would actually be the best idea. Then they would have an understanding of what tax was for rather than having been taught only how to avoid it like all the ‘experts’*. We could then hope that all the loopholes would actually be filled and companies and rich people would start paying the taxes that they owe.

      * X has no value and a spurt is a cock under pressure.

    • reason 1.5
      12 April 2016 at 8:17 pm

      Going by The Gormless fools gormless comment we should appoint Clint Rickards to head rape crisis ……………….

      In the real world of New Zealand being a tax haven set up by a bent money man Key may have overplayed his rotten hand by appointing Sherwan……..

      Lets face it ………….. If New Zealands tax haven regulations were doing their job that JK intended in protecting and hiding rich pricks and criminals money then Sherwan will think its great and give it his seal of approval.

      On a side note but still regarding rich criminals and their close links to the national party ………………… I suspect that the illegal politically inspired raid on Nicky Hager had as much to do with this story as it did with the supposed hunt for rawshark http://www.stuff.co.nz/business/money/8515361/Money-trail-leads-home-to-New-Zealand

      Remember Hooten, Cactus Kate and other national party faithful wanted to hurt Nicky over this …………

      In a conspiracy theory all of my I own I believe the last thing the Nats want to happen now is for rawshark to be arrested ……

      The Nats and their corrupted police flunkies were more interested in punishing those who spread the information of their dirty politics …….. critical media voices in other words.

      Also Key should give his mate Weldon a blow job for sacking Campbell because Campbell live would be crucifying the nats and key over them officially setting us up as a dirty little tax haven ……

  2. Nick 2
    12 April 2016 at 12:45 pm

    ShonKey seems to know nothing about tax at the moment…

  3. Bill 3
    12 April 2016 at 12:46 pm

    I’m going to ask the same question that I asked the other day – why isn’t IRD being tasked with getting to the bottom of things and reporting back with recommendations?

    Apart from anything else, we’ve already paid them (assuming Mr Shewan’s pockets will be lined for his efforts, courtesy of the public purse) and they (IRD) have a plethora of expertise and info at their fingertips.

  4. Saarbo 4
    12 April 2016 at 1:04 pm

    http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11552462

    And the Chair of the China Construction Bank is Jenny Shipley…which of coarse may mean nothing…because Shewan’s a professional. Very cosy though.

  5. Poission 5
    12 April 2016 at 1:05 pm

    On retiring from PwC, Shewan made clear his views on progressive tax rates when he said high taxes on personal incomes were the most damaging to the economy for growth and jobs. This statement is erroneous as was shown in a famous OECD study which showed that countries with robust progressive taxes perform better in both growth and jobs over the long term.

    The obvious problem is the role of complexity (over sophistication) of both tax laws and financial regulation).Which both allows oligarchical expansion. eg Haldane.at the expense of equality.

    What is true of financial regulation is true too of tax. For example, studies have analysed the incidence of tax evasion and avoidance across different countries. They have found that the single most important determinant of tax evasion is often the complexity of the tax code (Richardson (2006)). The greater the complexity, the more numerous the loopholes, the greater the incentive and means to exploit them.

    Third, complex regulatory frameworks tend also to be inequitable. They advantage those best able to exploit the cracks, navigate the uncertainty, squeeze through the loopholes. This tends to be those with the deepest pockets who can afford the most sophisticated risk-modeller, the slickest tax accountant. Complexity, in other words, acts like a regressive tax.

    http://s3.amazonaws.com/content.washingtonexaminer.biz/web-producers/041415%20Tax%20Code%20Complexity.jpg

    http://www.bis.org/review/r130411d.pdf

  6. Bob 6
    12 April 2016 at 1:13 pm

    Hold on, “John Shewan, former head of PricewaterhouseCoopers and past member of the Tax Working Group, has in recent years been on the wrong side of two of New Zealand’s most notorious and significant tax avoidance cases”
    These cases were in 2009 and 2011, I thought National looked out for it’s rich mates, didn’t pursue tax avoiders and only picked on beneficiaries? Huh, thanks for clearing that up.

    As for the rest of the post, Shewan does indeed look like the wrong man for the job at hand.

    • Macro 6.1
      12 April 2016 at 1:47 pm

      National weren’t pursuing tax avoiders Bob the IRD were.
      Shewan was desperately trying to defend them – his pleadings were found in court to be worthless.

      • Draco T Bastard 6.1.1
        12 April 2016 at 3:51 pm

        +1

      • Bob 6.1.2
        12 April 2016 at 5:01 pm

        “National weren’t pursuing tax avoiders Bob the IRD were”
        Right, so the extra funding in the 2011 Budget wasn’t from National?
        http://www.nbr.co.nz/article/budget-2011-ird-tax-evasion-crackdown-pays-ng-93514
        Can you let me know when the IRD started writing their own Budget?

        • John Monro 6.1.2.1
          13 April 2016 at 9:30 am

          Fine, fair enough point as far as it goes, but this extra funding only came after a request from an IRD Tax Working Group, revealing the appalling amount of tax avoidance by the richest in our society. There was a strong political pressure to do something about this, and John Key obliged for obvious political reasons (which is what he always does) and not from any sudden blooming of his conscience. Anyway, all this in no way alters the overall issue that John Shewan is not the man for the job – he is as deep in tax avoidance as any man in New Zealand; asking him to conduct the review is like asking the proverbial fox to mind the proverbial chickens. It’s typical Keysian policital trickery. Additionally, the terms of reference are restricted to mere mechanicals. What the country needs to be looking at is whether having any foreign trust registerable in New Zealand is the moral/ethical thing to do. These trusts have only one use, to hide asset ownership and aid foreigners in escaping their obligations in their own domicile. Shewan won’t be looking at that, and that’s the question John Key and his cronies will be desperately trying to avoid.

  7. Gristle 7
    12 April 2016 at 1:30 pm

    1. Punt for review and push the issue off the front page.

    2. Set up a review with limited terms of reference. (Can anybody point to what the actual terms of reference can be found.)

    3. Appoint a somebody who understands a knudge and a wink.

    4. Don’t make the review process visible.

    5. Release the report on Christmas Eve.

    I am surprised that a pro forma report was not supplied.

    • Draco T Bastard 7.1
      12 April 2016 at 3:53 pm

      I am surprised that a pro forma report was not supplied.

      Oh, it’s probably already written and says all the right things (as far as tax avoiders go) but I suppose that they felt that releasing it this soon may be a little bit suspicious.

  8. TC 8
    12 April 2016 at 1:48 pm

    Its the only patsy they could find as the other one is waiting to be the next GG having whitewashed keys use of the GCSB etc.

    Quality whitewashers are rare y’know

    • Macro 8.1
      12 April 2016 at 1:54 pm

      Very true. Shewan is an excellent choice. I’m sure the job will be beautiful done and the whole thing will come out gleaming white.

  9. The Real Matthew 9
    12 April 2016 at 1:52 pm

    Who do you propose we get to head up the review?

    Sue Bradford?

    • Macro 9.1
      12 April 2016 at 1:56 pm

      Now that’s not a bad suggestion! But I don’t she would as good a job on the whitewash as Shewan. In fact it would probably look worse than it does now.

      • TC 9.1.1
        12 April 2016 at 2:26 pm

        Key doesnt give a rats thats why hes appointed the tax dodgers lawyer.

        The IRD’s lawyers would deal to this easily but thats not the intent is it folks…..look over there its dodgy don.

    • Gristle 9.2
      12 April 2016 at 2:13 pm

      The whole review issue has very little to do with tax. What really has to be determined is about ethics and what policy position NZ wants to have on being an enabler of tax evasion, money laundering, corruption, organised crime etc.

      Having a Tax Expert running the review is a technocrats response. This is more a job for a senior judge (or maybe a philosopher.)

      • Incognito 9.2.1
        12 April 2016 at 10:10 pm

        I fully agree with your comments.

        The three areas that need to be covered are: tax, legality/law, and ethics. In my view, the problems that are slowly coming to light are predominately that of ethics. But then again, John Key’s conception of ethics is probably something like a nice looking pony tail …

        In any case, this is or ought to be a mammoth task that is way too big for one man to handle. This shows the arrogance by Key and Shewan and that indeed the outcome is predetermined from the outset.

        The ‘review’ ought to include a proper analysis of the Panama Papers and the 60,000 references to New Zealand; one can only hope that Shewan is a speed-reader.

    • Stuart Munro 9.3
      12 April 2016 at 2:27 pm

      I wonder if Charles Manson is available. Or Dr Shipman. We need someone who understands severity.

    • AB 9.4
      13 April 2016 at 10:03 am

      Well she passes the moral compass requirement for any appointee that is so essential.
      Probably doesn’t have much technical knowledge of taxation matters. So not a bad candidate (vastly better than Shewan) but there are likely better ones.

  10. Anno1701 10
    12 April 2016 at 2:02 pm

    Seems to be the go-to responce, the same is happening in the UK too

    “Educated at Oundle school and Oxford University, the 61-year-old former corporate lawyer is now overseeing an official inquiry into any wrongdoing arising from the Panama Papers tax leaks.

    Troup turned from poacher to gamekeeper in 2004 when he left Simmons & Simmons to work on corporate tax policy in Gordon Brown’s Treasury, joining HMRC in 2012 as tax assurance commissioner, where his role was to oversee large settlements with big companies, which during his period included Starbucks

    To his critics, Troup embodies what the Labour MP and tax justice campaigner Margaret Hodge calls the “incestuous world” of tax professionals..”

    http://www.theguardian.com/politics/2016/apr/11/edward-troup-advising-tax-havens-leading-hmrs-panama-papers-inquiry

  11. byd0nz 11
    12 April 2016 at 2:16 pm

    The Panama Papers.

    The Panama Papers, Capatalist capers,
    What’s new,
    NZ has joined the sleeze scale.
    Under corporate Key and a Bill English fee,
    NZ has been set up to fail.

    • Draco T Bastard 11.1
      12 April 2016 at 3:56 pm

      +1

      • greywarshark 11.1.1
        12 April 2016 at 5:50 pm

        Now set it to music with a banjo (a gold hunter’s banjo pan would be appropriate).
        This video shows how us plebs have to work for any gold we get unlike magicians like Key who summon it out of the ether, probably using a cloud, with the aid of their familiars.
        (https://www.youtube.com/watch?v=WZ5_lXRp9Qg

        And Red Green show just for a laugh at ourselves as we bumble around trying to do physical things with real materials –
        (https://www.youtube.com/watch?v=vkk-sOo8Hqw&nohtml5=False
        (https://www.youtube.com/watch?v=HxYe26CIvuY

        You can see where whosname in Auckland got his idea for a marine going car when you watch this.
        (https://www.youtube.com/watch?v=b-WjgrrcjvQ&nohtml5=False
        edited

        • Anne 11.1.1.1
          13 April 2016 at 11:29 am

          If you’re talking about Alan Gibbs, he was donkey deep in the wine box saga and you can bet your bottom dollar he’s donkey deep in off-shore tax havens too. Btw, he was the main source of ACT’s once bottomless purse in the 1990s. He was the big boss at the time. Nothing happened without his approval.

          • greywarshark 11.1.1.1.1
            13 April 2016 at 2:28 pm

            Tony Gibbs. lived in Switzerland for a while but came back here. Easier living here, (you can spread yourself over the country) for the wealthy now the place is properly geared up for the wealthy’s wants.

            I saw a rerun of an old video of him displaying his green fields. He chuckles away as he goes round, finding lesser mortals amusing. He has his art version of a gated community with a long red metal fence running across his pastures. In his mind he likes audacious art I think, also his wife. Probably from his august view the whole of NZ unfolds like a giant art installation with lilliput people running around like ants going about their serious little purposes.

  12. Keith 12
    12 April 2016 at 3:37 pm

    How fucking predictable, a corrupt tax avoidance scheme that allows money laundering that Key is so resolute on keeping, has to be made to go away with a equally corrupt scripted whitewash.

    I suppose its thus far worked many a time for Key, Judith Collins begin the latest with that pathetic excuse for an inquiry with such narrow defined guidelines. How utterly galling it is that she, of all people, is now Minister of Police.

    Shall we dispense with the waste of money and the bullshit and declare now there’s nothing to see here?

  13. Jcuknz 13
    12 April 2016 at 4:19 pm

    My first thought was the old saying that the best gamekeeper is a retired poacher.

  14. Rosie 14
    12 April 2016 at 4:58 pm

    Thanks for the information Simon. Information provided by authors at The Standard on the seedy murky topic of NZ’s part in the Panama Papers has been like sunlight over the last week, in contrast to the information provided by the msm, which appears to be patchy at best.

    And then there’s the political bias. Patrick Gower, on newshrub last night firmly assured us that John Shewan is an expert, implying that we could trust him. He failed to mention that John Shewan is an expert in helping people and banks to avoid tax therefore is a totally unsuitable person for the job tasked to him.

  15. Ad 15
    12 April 2016 at 5:03 pm

    Thankyou Simon always suspected it.

  16. Richard McGrath 16
    12 April 2016 at 5:05 pm

    John Shewan has just gone up in my estimation.

    A good way to downsize the tax avoidance industry might be to have personal and corporate tax at the same flat rate – say 20%, and abolish GST, thus removing the ability to alter one’s tax structure in order to reduce overall tax liability.

    I hope, given the anti-privacy rhetoric emanating from the left, that everyone in the Labour and Green Parties are doing all they can to maximise their tax liability. Don’t forget that claiming any business expenses reduces liability and makes you a tax dodger.

    And what about people like me who have halved their tax liability to the NZ government by working offshore in lower tax jurisdictions – or others who have simply decided not to work – does that constitute tax dodging (avoidance)?

    • Steve Withers 16.1
      12 April 2016 at 6:59 pm

      No. Keep GST. It’s the only tax many of these people pay.

      Not earning an income isn’t avoiding tax. It’s avoiding an income.

      The greens have no problem with law-abiding, ethical private businesses. No wonder so many businesses don’t like the Greens. They know they are the other sort.

    • Whispering Kate 16.2
      13 April 2016 at 11:59 am

      Richard McGrath, If you are a salaried worker you should be darned grateful for the low tax rates on higher incomes we have in NZ . You must be working in a pretty dodgy place to be paying less – do you try also to collect tax free perks as well as working in your low tax country. God you must hate paying tax to make the effort and shift overseas. How much tax is too much tax – how about when you are bludging and using the roads where you work or the hospital if you are rushed in, do your taxes there contribute to their costs – good enough then for you isn’t it. If you are privileged enough to be able to earn a high income and still want to lessen your tax take you need medical help. Most enlighted European countries actually have high tax rates and seem to be happy enough paying for it as they have superior health/education/infrastructure than we do. How do you think this country was built up and our roads, schools, universities got up and running – fresh air. It would go to the dogs if you and your lot had their way. What is it with you people that paying tax for a better society is such a burden.

      • Richard McGrath 16.2.1
        13 April 2016 at 8:34 pm

        Yes Kate, I’m working in a very dodgy country: Australia. I get no tax-free perks – being a non-resident my food and remote location allowances are taxed. Of course my taxes help support the local roads and hospital in the community where I’m employed – since January I’ve paid over $20k in tax – does that seem like enough? I don’t mind paying for quality products, I just don’t believe that politicians and bureaucrats are the ideal providers of those goods and services.

    • AB 16.3
      13 April 2016 at 12:14 pm

      “And what about people like me who have halved their tax liability to the NZ government by working offshore in lower tax jurisdictions … does that constitute tax dodging ”
      Do you use public infrastructure in NZ – roads, schools, hospitals, breathable air, an environment that makes outdoor recreation possible, a police and justice system, etc. etc. And do you benefit from living among civilised people who feel they have enough of a stake in society to generally behave well towards each other?

      If the answer is yes then you are quite possibly enjoying the benefits of a properly functioning society without paying an appropriate share towards its maintenance and support. This might be construed as free-loading.

      • Whispering Kate 16.3.1
        13 April 2016 at 1:07 pm

        Couldn’t agree more – free loading. And when the gentleman does decide to come home and reside/retire and he can no longer pay for his private health because of the excessive premiums, will he free load again on our over burdened health system and expect it. And, will he expect to be paid a superannuation to top up his overseas income investments, gratis the NZ tax payer. God some people have a bloody cheek. No wonder this country has lost its heart and soul.

        The wonderful system we used to have which gave us all a great secure life was paid for in taxes from each and every one of us. Now the 1% choose to pay tax, their sense of entitlement is grotesque, its disgusting.

        • Richard McGrath 16.3.1.1
          13 April 2016 at 8:44 pm

          Kate, you’re making a fool of yourself. “The gentleman” is quite happy to pay the costs of his medical and dental care, which is obtained in the private sector, both in NZ and offshore. He also has private pension funds, both in NZ and offshore, and will not need anything from the taxpayer when he retires.

          I don’t believe I’m entitled to anyone else’s wealth, and I object to anyone thinking they’re entitled to mine. Yes, what a cheek – how “grotesque” and “disgusting” of me.

      • Richard McGrath 16.3.2
        13 April 2016 at 8:36 pm

        AB – The fly in the ointment, sadly, is the fact that I’ve paid $21k in tax in the nine weeks I’ve been working there. So I think we can park words such as “freeloader” somewhere else, don’t you? Or isn’t that enough?

        • Whispering Kate 16.3.2.1
          16 April 2016 at 10:57 am

          If you paid that much in tax over 9 weeks why the hell do you stay there. I thought you were there because of our high tax rate – can’t understand your logic at all.

    • Wayne Luxton 16.4
      13 April 2016 at 12:45 pm

      If we expect there is public infrastructure for our convenience and well being then we must expect to pay for that. We have to define what this security is and look at what might change that security. One thing we should have learned that equality and health issues we collectively agree with in democratic processes has been a very peaceful way of doing things. What has been inflicted on the Middle East in the name of fuel security was for a system that is proving to be unsustainable and damaging everyones possibility of survival. The companies that have profited in that have a moral obligation to be part of the community that has to fix it.

      What we need to do is start taxing the damage by putting a price on the pollution ie carbon tax, royalties on chemicals to go into the environment, and scarcer resources need to be taxed for the good of the nest generation or we aren’t even seeing our own humanity.

      Leave the income tax rates where they are, remove GST on the poor to boost the spending we do need around our children, Make rates tax deductible but put the public welfare services in Regional Council hands and put the social taxes on the common resources, land being the significant one. This means the availability of land by downsizing is stimulated by increasing social pressure needing greater funding falls on the better sharing of the commons.

      Any thing other than this is suicidal for future generations.

      We have to deal with climate change and here is a staring point for our democracy.

      Government services should be used to publicly analyse options raised in good public discussion and the internet gives us a tool that is already set up in many government departments. The good ideas will emerge and this can be counted as already is in Facebook.

      Surely parties can align on this common ideal and I am sure local body resources can also be added.

  17. Steve Withers 17
    12 April 2016 at 6:58 pm

    The laws may well be just fine for those countries we have tax treaties with. What the Panama Papers seem to have uncovered is that the countries we do NOT have tax treaties with form a defacto web of tax havens.

    Key keeps talking around this issue.

  18. Don't worry. Be happy 18
    12 April 2016 at 7:11 pm

    The largest dump of data in history has a long way to go yet….it may well see off the whole system of tax cheats and crooks, of which Key has to be involved donkey deep. This is how he made his first fortune. The leopard does not change it spots. So for those who lament Key’s inflated popularity, long trumpeted but which has delivered only a slim Parliamentary majority, be patient. The truth will out.

  19. Gangnam Style 19
    12 April 2016 at 7:27 pm

    http://www.theguardian.com/politics/2016/apr/11/edward-troup-advising-tax-havens-leading-hmrs-panama-papers-inquiry?CMP=twt_gu

    “To some, his experience qualifies him to lead the inquiry, but critics say he represents the ‘incestuous world’ of tax professionals” – seems familiar…

  20. AmaKiwi 20
    12 April 2016 at 8:19 pm

    How can anyone in parliament defend a system of government where the accused (Key) appoints the person who will investigate the charges against him?

  21. whateva next? 21
    12 April 2016 at 8:55 pm

    All explained here, no need for a review thanks John:
    “The 1% hide their money offshore – then use it to corrupt our democracy ”
    Aditya Chakrabortty
    http://gu.com/p/4t8t8/sbl

    • AmaKiwi 21.1
      12 April 2016 at 9:51 pm

      @ whateva next?

      I read your link. I am trying to get answer to the question, “How can this country tolerate a SYSTEM which is so corrupt?”

      Who would tolerate a legal system where the accused robber, rapist, or murderer selects who will investigate the charges against him? NONE of the politicians who created the tax/trust system are entitled to have anything to do with the investigation. NONE.

      Am I the only one who thinks Key selecting the sole investigator and setting his terms of reference is insane?

      The main stream media’s and the country’s silence is deafening.

      • AmaKiwi 21.1.1
        13 April 2016 at 10:26 am

        NZ Herald editorial today very, very politely sort of agree with what I said. They criticize Key’s “review” and want non-NZ tax experts.

        I have complete confidence Key will ignore the Herald editorial.

      • whateva next? 21.1.2
        13 April 2016 at 8:00 pm

        “Am I the only one who thinks Key selecting the sole investigator and setting his terms of reference is insane?”
        Not at all Amakiwi! we are being driven around the bend so everyone gives in and accepts the corruption, which sadly works with so many.
        “A nation of sheep will beget a government of wolves”
        (credited to various people)

  23. saveNZ 23
    13 April 2016 at 9:29 am

    Great summary.

  24. Simon Louisson 24
    13 April 2016 at 9:36 am

    The Australian Financial Review’s “Chase the money” article published in today’s Dominion Post
    http://www.stuff.co.nz/business/world/78768369/Panama-Papers-Mossack-Fonseca-bragged-about-NZs-easy-trust-system
    details how New Zealand is a tax haven with totally inadequate disclosure rules.
    A staffer from the NZ office of the Panama firm at the centre of the Panama Papers leaks, Mossack Fonseca, quotes advice they received from Nexus Trust: “NZ has very weak laws in regard to due diligence; they only require utility bill and passport. Trust companies are not required to hold a licence.”
    The article details how those weak laws were exploited by the likes of Malta’s Energy Minister Konrad Mizzi and the Maltese Prime Minister’s chief of staff, Keith Schembri.

  25. Hami Shearlie 25
    13 April 2016 at 10:50 am

    Shewan wouldn’t want to advise any changes to the system that has aided him in his very profitable work for mega-rich clients so far! And no doubt he will still be in this lucrative business in the future, so he will go all out in advising no or very little change! Why would the turkey want an early Christmas? Instead of employing a tax expert to advise on this problem, why not employ an ethics expert? But then, would Jonkey know any, seeing he and ethics are strangers to each other?

    • The Gormless Fool formerly known as Oleolebiscuitbarrell 25.1
      13 April 2016 at 1:32 pm

      Because ethics experts are generally not very good at identifying loopholes in the tax system and at drafting legislation to fix them.

      For that, ideally, you want a tax expert.

  26. john 26
    13 April 2016 at 11:19 am

    avoidance= legal
    evasion = illegal
    When it comes to tax. So point one would be…nothing to see here except a waist of paper (enough to kill a forest).
    Only a socialist would be outraged, as it is only them that believe the tax money collected belongs to them for them to buy votes with and remain in power (their true goal).

    The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation. Vladimir Lenin

    • Simon Louisson 26.1
      13 April 2016 at 3:48 pm

      There is a very fine line between some tax avoidance and evasion and it is entirely possible for tax avoidance to be deemed illegal, as occurred when the Australian banks used their structured finance scheme.
      Tax evasion is where you deliberately break rules, usually by hiding income, to evade paying tax. That is a criminal act.
      In the case of the banks’ structured finance deal, where Shewan advised Westpac, there was an initial opinion given by IRD that the deal was okay. Later though, because so much was at stake, IRD took it to court and it was deemed illegal by the Appeal Court and lower courts. However, the issue of evasion was not raised. Had it gone to the Supreme Court, in all probability the banks, unless the Appeal Court was found to be wrong in law (unlikely), would have had to pay up (because the scheme was deemed illegal) and they would have had to pay penalties, which is why they agreed to settle. IRD settled because they figured there was a small chance the banks might win in the Supreme Court given how random legal judgements seem to be.
      The Hooper Penny case of the Christchurch orthopaedic surgeons manipulating their incomes was another instance of illegal avoidance that was not evasion. In neither case were criminal charges proffered
      Wikipedia’s comment of tax avoidance is that: “While forms of tax avoidance which use tax laws in ways not intended by governments may be considered legal (clearly not always), it is almost never considered moral in the court of public opinion.”

      The main issue about the complex schemes of tax avoidance dreamed by big accounting and legal firms, and used by unscrupulous individuals and corporates, is that it means those people and entities avoid paying their fair share of tax and the rest of us have to pay more. Tax is how we build communal facilities and services and create a decent society. Those who avoid taxes avoid their responsibilities.

      • john 26.1.1
        13 April 2016 at 4:33 pm

        and SO WHAT!!!!
        “nothing to see here except a waist of paper (enough to kill a forest).”

        • Simon Louisson 26.1.1.1
          13 April 2016 at 5:53 pm

          The point that seems to evade John who is wilfully thick, is that not all tax avoidance is legal and his simplistic definition that evasion is illegal and avoidance is legal is wrong.

  27. Ralf Crown 27
    13 April 2016 at 11:29 am

    Not sure. The end result of the “WineBox” saga was that both wealthy people and companies joined an exodus from New Zealand, jobs and money was lost to overseas. People started to earn money from speculation, in housing, but not everyone – as we know. Poverty in New Zealand is rampant now. New Zealand claim to have the second lowest tax rate in OECD, but only if you exclude GST and the complex systems of rates and “user pay” that residents can no0t escape. In fact the tax for the average individual is something like 40% to 50%, which is still good compared to some EU countries where the tax is up to 80%. People get protection from political and religious persecution, but what about financial persecution. On the other hand, low tax countries take the cake and eat it, and still they get so much money they hand it back to the residents in cash. Predatory tax regimes does not work, be it the Roman Empire or Kiwiland.

  28. Robert Glennie 28
    13 April 2016 at 11:43 am

    Much mud has slid off John Key’s back over the years, some of it almost like water off a ducks back. But could some of this latest barrage stick?

    https://willnewzealandberight.com/2016/04/13/will-the-panama-papers-be-the-mud-that-sticks-to-john-key/

    Possibly. It depends on how much the media read into it. If they turn on him, then this will be his last term in office.

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