FACTA

NZ in Panama paper leak 60,000 times

key-panama-lieHere’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.

key-resign-no1


snowden-key-lying-lie



Links:

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.

Tax toll on NZ

The gratuitous U.S. government grab for non-U.S. assets, and that’s a FACTA

FACTA cartoonI believe our birth right in the West is to be free. The money we earn and our personal information should be our own.  The place where I’ve found that our government thinks otherwise is at the bank.

I first noticed the erosion of our rights in the early 1990’s, when the NZ government wanted to link our IRD (tax) number with our bank accounts.  It was optional, but if you didn’t give the bank your IRD number, any interest earned on your bank account would be taxed at 33%.  When I told the bank teller that they couldn’t have my IRD number the teller said “It’s coming you know.  You can’t fight it.”  I replied, “Well if everyone in the country has this attitude, you will be right!”

She was right.  Within a year, our government, wholeheartedly following it’s money master’s neo-liberal economic doctrine, sold that NZ owned Post Bank to a foreign bank.  The bank in the shopping centre soon disappeared, along with her job, and bank fees averaging $28 per month were introduced.  The government also upgraded our tax legislation – granting the IRD scary powers, exempting it from our privacy laws.

So that was back then.  Today the IRD can just reach into our private bank accounts and take our money if we don’t pay.  I discovered that last year on one of their forms.

FACTA

FACTA Bank cartoonAnyway, fast forward from the early 1990’s to late 2014, when I was at the bank filling out a deposit slip; and I overheard a man opening a bank account at a nearby desk being asked if he was an American citizen.  Then I heard the bank staff member explain they have to ask the question because of “FACTA”, a new law.

That got my attention.  I am married to a man who is an American, even though he left the US as a child. When I got back to the office I told him about this new banking law.  When we looked up FACTA, we were horrified.

The US government regards anyone who has been born in the states as a taxable resource.  Citizenship Based Taxation, FATCA, is designed to serve as a capital control; Human Capital.  The US, along with Eritrea, does Citizenship Based Taxation.  Eritrea was recently condemned by the UN (Resolution 2023) for doing it.

Take the case of London’s Mayor, Boris Johnson.  He was born in the USA but returned to England with his parents at the age of 5.  The U.S. government forced him to pay the capital gains tax on the sale of his Islington home.  He has never lived in America, but that means nothing to the IRS. They are hunting everyone everywhere.

I was thinking through the ramifications of FACTA for us;
What happens when we want to save for our retirement?
What happens if we want to open a new bank account?
What happens if we sold my house that I bought and freeholded before I met my husband?  Would the IRS be alerted if the money went into our joint bank account?
What happens to my information?  I am a non-US citizen, and my personal data would be sent to the US with no privacy protections.
It doesn’t matter that we already pay taxes in NZ.  The only way around all of this is for our accounts to be separated.

The form that US tax subjects have to fill out is a FBAR form.  If you get any information wrong on the form the IRS can substitute penalties for taxes. I’m sure you get the drift.

We decided that if asked about my husband’s citizenship we’ll answer truthfully that he is a NZ citizen and let his US passport rot in a drawer.

If the letter from the US government does come, my husband said he would renounce his US citizenship.  I told him he would be better to “relinquish” it, in case he ever wants to visit the US.

noo_zealandWe were appalled at the privacy invasion.  New Zealand has agreed to hand over our bank account details to a foreign country!  Our privacy laws are useless, they haven’t been overhauled in years, and IRD with its massive powers abrogates them.  This signifies the unacceptable encroachment of the government into the lives of every citizen – both here and in the US.

More about this here:

A New Zealand government didn’t want the political fallout which would come from breaching our privacy legislation, so they used IRD, being immorally above that privacy legislation, as a backdoor for US to spy on its own citizens.  If they did this once, why won’t a future government find it convenient to use the Teflon IRD on other issues that might be a bit embarrassing politically? Answer: there’s nothing stopping any government doing this. It’s the premise of this blog that IRD and its huge powers, is where the rubber meets the road to our total serfdom. All the Left protesting against GCSB, NSA and PRISM, what’s the difference, again, please?
http://lifebehindtheirondrape.blogspot.co.nz/2014/04/fatca-nz-officials-report-crime-that.html


Just to add insult to injury – the cost of enforcing US tax laws should be borne by the USA and FATCA, but the cost has been passed on to our spineless NZ government.

FATCA_Uncle_SamThe US government treats its citizens like a bankrupt bully with a gambling addiction.  It’s got it’s children, and their children’s children into debt; and now it’s raiding their piggy banks.  This is what it looks like when the financial elite get control.  My advice is protect your wealth and your assets from them.


There are more links to articles about FACTA here:

http://www.businessinsider.com/some-americans-abroad-are-renouncing-their-citizenship-to-avoid-the-irs-2015-3

http://lifebehindtheirondrape.blogspot.co.nz/2014/04/fatca-nz-officials-report-crime-that.html

http://www.interest.co.nz/news/55283/government-not-necessarily-position-influence-us-fatca-revenue-minister-peter-dunne-says

http://armstrongeconomics.com/2014/12/01/usa-is-it-time-to-turn-off-the-lights/
http://www.radionz.co.nz/news/national/242396/new-bank-law-raises-privacy-fears
http://jamaica-gleaner.com/gleaner/20131002/news/news4.html
http://www.economist.com/news/leaders/21605907-americas-new-law-tax-compliance-heavy-handed-inequitable-and-hypocritical-fatcas-flaws/comments?page=3