Here’s a story of greed and hypocrisy. This is what happens when a country elects a banker as prime minister.
New Zealand is one of the highest taxed nations when it comes to income tax, and we also pay 15% GST on everything we buy. Even children have to pay tax after the government cut children’s tax credits in 2012.
There’s no privacy protection for us when it comes to the government or IRD.
Also, under the US FACTA law (Foreign Account Tax Compliance Act), any NZ citizen unlucky enough to be born in the US will be reported on by the NZ government to the IRS if they try to open a bank account, or file a company return.
So that’s what happens to individuals.
But if foreign investors park their money here, no questions are asked and no tax is paid.
Our prime minister John Key got the law changed for this in 2011 when he wanted to turn NZ into a “financial hub” – like Ireland. When he was head of Merrill Lynch’s derivatives and global foreign exchange business in London, he shifted a lot of the bank’s business to Dublin.
The result was Ireland’s financial crisis, where the clever use of tax-haven rules and a huge credit boom permitted real estate prices and construction to grow quickly before declining ever more rapidly.
Even though John Key was fully cognisant of Ireland’s collapsed banking system and financial hub collapse, he was cock-a-hoop about doing the same thing to New Zealand.
Glib, smooth and dismissive, in December 2010 Key rubbished objections to his plans and directly specified a 0% tax rate, telling the Minister of Economic Development Gerry Brownlee to deliver him a paper that had zero rating of funds.
In February 2011 Gerry Brownlee (Minister for Economic Development) delivered what he wanted, and in May 2011 the international financial “advisors” started drooling.
The law change in September 2011 to 0% tax for foreign investors made NZ a tax haven.
When a 60 minutes report came out in 2012 about wealthy foreigners dodging tax, Peter Dunne (government
lapdog minister) and John Key described it as “legitimate tax avoidance.” Under the law John Key said that tax evasion is illegal, but tax avoidance is not.
But this is what the IRD department says to the NZ tax payer about tax avoidance: What’s wrong with tax avoidance
Nothing got done about this issue.
Now in 2016 the birds are coming home to roost. We have NZ trusts at the centre of Malta money scandal, and NZ is mentioned in the Panama paper leak 60,000 times.
What else are we going to find?
Prime Minister John Key’s register of interests has revealed he has a short-term deposit in a company specialising in New Zealand foreign trusts. Source: Edwin Mitson, Business Desk, Yahoo! Finance.
He has refused to disclose his tax details.
When Key was asked if it was right that trustees did not have to tell the IRD who was behind the trust, what assets it had, its income, its beneficiaries, the residence of its settlor nor the nature of its assets, Key deflected reporters by saying they should “ask the IRD.” Even though he was the one who demanded the tax shelter for foreign investors in 2011.
Iceland’s prime minister resigned last week after being the first major casualty of the Panama Papers leaks which revealed how the super-rich manage their money.
Will there be calls for John Key to resign if we find his hand in the cookie jar? Unlikely. He previously promised to resign if it was proven that the GCSB carries out mass surveillance of New Zealanders. When the Snowden revelations did indeed show that in 2015, nothing happened.
2010 Key itching for quick action on financial hub
2011 Key changed the law to extend NZ as a tax haven
New Zealand now an attractive tax location for offshore managed funds
2016 Panama papers: NZ trusts at the centre of Malta money scandal, Mossack Fonseca papers show
Panama papers: Mossack Fonseca ‘bragged about lax New Zealand tax rules’
Calls mount for tighter rules on foreign trusts as Key denies NZ a ‘tax haven’
Quote: “Whilst the PM has been shaking hands with devious financial operators around the world and promoting our tax system, and doing little to ensure its integrity, we are now known as one of the world’s ‘quiet tax havens’ as the leaked documents reveal.”
He said Key and his colleagues were doing nothing for NZ’s international reputation, with more than 12,000 trusts set up here that pay no tax on their overseas’ earnings.