Highlights the issue of how using offshore tax havens and complex company and trust arrangements mean some individuals and companies avoid tax.
Our problems are probably of a smaller scale but the principle is the same.
It is one of the reasons I want to close loopholes in our tax system – a much better approach than criticising Kiwis on average incomes who have problems with their budget some months.
And his second post in the same series sheds a bit more light on the subject.
You guys should be highlighting this. Questions on notice to the Minister of Revenue may not produce answers, but could produce useful headlines of “Government cannot explain low tax payments” or “government refuses to condemn tax cheats”.
The so UK bankers who employ 100,000s of people and bring in masses of wealth to the UK, finance businesses and pay tax are the bludgers – instead of the non-producers in the UK – because you can’t rob them enough..?
London is – by some miracle – still a financial centre but the large banks there are already talking about moving offshore due to government over-intervention, would it really help the UK if some of the banks up and left for Switzerland..?
Perhaps get Paula Bennett to accidentally release the tax figures for certain trusts, corporations (Fonterra?) and some individuals? Is there a mole in the hole (IRD)?
So Trev we are to believe that you on your own have some new radical ideas about how to close tax loopholes from opposition that Dr Cullen didn’t have when he had the smartest finance guys in the Treasury reporting to him for nine years.
Enough of the rhetoric Trev. Put those ideas out there. Don’t just say you’re going to “close loopholes”. Be specific. You’re talking about changes to tax legislation. Show us what you’ve drafted. Let’s see how many minutes it takes for a tax lawyer to drive another truck through them.
Dominoes: I’d start by naming and shaming those who don’t pay their fair share. Bad PR has a cost, and businesses which depend on public goodwill wil want to avoid it.
Sadly, this does not help with bankers.
Oh dear….
Before you all embarrass yourselves in blissful ignorance quoting NRT’s silly post, perhaps ask someone in the Labour Party with a tax accounting background as to how those tax expense numbers of No Right Turn cut and paste are actually calculated and reported…perhaps maybe….I’m now thinking who could assist you with that….Cunliffe perhaps?
And of course the worst tax bludgers are actually those capital gains hungry individual farmers. Many deduct so much interest as an expense they pay zero tax.
Okay I will assist as I’ve gone into moderation – example Infratil see pg 53 of accounts to see what a tax reconciliation looks like.
Pre-tax profit per NRT 106.3, raw calculation 31.9 with tax at 30%
However there is a very large write-back of Net investments/impairment of 30.4
In laymans terms, they have revalued a stinker of an investment by the looks based on the market situation. If they sell it at a higher price of course they will have to return the difference and pay tax on it.
pg 43 gives the explanation of the impairment as well as pg 48.
In essence the law and accounting standards requires reporting as such. It is a timing difference that will be flushed later if the loss isn’t realised.
I haven’t looked at the others but given the economy I imagine there are plenty companies with similar situations.
From what I see on TV over here the tax laws that Barclays and other Banks operate under in the UK are those probably put in place by Labour. Even if they weren’t laws passed by Blair/Brown they had 13 years to change them and in typical fashion did nothing – except whinge once they were in opposition.
It seems that sort of inaction is a symptom of Labours management of economies on both sides of the world.
Trevor, it is clear that neither you nor Mr. Idiot know how to read an annual statement. Surely it is obvious that the last place you will find evidence of shady tax dealings is in the publically available annual statement?
MacDoctor – clear you don’t know me very well – it is one of the things I can do very well.
Most of the protocols used by companies to plan tax are by way of the Double Tax Agreements which have to be mutually agreed between countries. They are difficult for small countries like NZ to unilaterally change, as that undermines confidence in the commercial legislative environment
It would appear the Cactus is too modest to shill for herself too much, but I thought her quote, in response to I/S’s observation that:
Infratil … reported a pretax profit of $106 million, but paid only $11 million in tax – an effective rate of 10.4%
was particularly useful:
If NRT looked at pg 53 he will see that for the 2009 year Infratil made a net loss of $93.8 million before tax, yet had a tax expense of $34.6 million…
Which I think put an end to that sort of analysis.
Don’t think so Graeme – we have done the deal with the Prickly One – she will come home and contract to IRD for 10% of non farm loopholes she closes – she has offered to do farm trust arrangements for free.
Jeremy M Harris – as long as you concede that your argument is essentially a case for subsidising banks.
Trev, if you are able to read them so well, I’d advise that you believe Cactus on this one rather than NRT. She utterly spanked him good and proper.
“it is one of the things I can do very well”
Apparently not, Trevor. You decided to take the “emotional outcry” path instead of the “logical look” and have embarrassed yourself.
pdm – even if that were so (Laws made by Labour) that doesnt stop the tories changing other laws by Labour they didnt like.
Trev – do you not think that when Labour start giving people the knowledge so we all understand your tax cuts and in the same motion turn around your parties polling to 55% those paying the top rate will do whatever they can to ensure that the tax laibility is minimised.
Here you essentially say people will do whatever they can to avoid excessive taxation. That is a fact of life. Of course this may also mean picking up their business and moving off shore (resulting in a 100% tax loss)
Why don’t Labour admit they have got it wrong with their $500 tax cut and go back to the drawing board. There will be unintended consequences of your policy when you come to justify how it will be paid for. What is the top tax rate going to be Trev and what level will it cut in at? Time for answers before your party loses more credibility.
And the whole issue hangs on what’s a fair share. Labour’s view is currently wildly at odds with the earning public.
If the cost of Labour’s bribes to persuade the unproductive to the polling stations means significant tax increases to the higher paid then, in a world where many skills are in widespread demand, we risk losing our brightest and best. Basically those who can go often do, and we’re left with the rest.
It’s about time Labour at least subscribed to the principle that hardwork and success should be encouraged, and unproductiveness and failure discouraged. Instead all it seems to do is to argue over and over again that everyone who isn’t successful is in that situation through no fault of their own. No acceptance whatsoever that there are consequences of choices, and that there are generally benefits to hard work.
High earners are givers. But they are givers with options. Demand that they give too much (by their own perceptions, not yours) and they might not hang around. The country could survive very well if all the takers chose to move to Oz. It wouldn’t be in such a good state if the top 10% of givers did the same.
Monty, the problem is that you think they go out of thier way to avoid paying EXCESSIVE tax. It would seem the fact that they are paying 1% would indicate that they go out of their wat to pay ANY tax. These people don’t draw a line and say “hey well that seems like a fair rate, when its that low we will just stop minimising our tax burden”.
How stupid. They will always do what ever they can to pay as little as they can just so that they can maximise bonus payments. If a benificiary does everything he/she can to maximise their payment so they can feed and cloth thier kids they are stealing your money. When a banker does everthing he can to not pay his tax bill so he can get the new Audi this year it is just envy that we go after them.
Hypocrits.
So given your tongue in cheek response re Cactus Trev we can take it as read that even though with all Dr Cullen’s wizadry over nine years in government, and with all those brilliant minds in Treasury helping him, he couldn’t come up with a cunning way to close tax loopholes. After two years in opposition, and none of them as either revenue or finance spokesman, and with no economic or tax advisers reporting to you, you haven’t come up with any ideas either.
So when you say “we’re going to close tax loopholes” there really isn’t any substance to your claim is there trev.
And the intent from Government to do the same Dominoes? This would be an area they would be teeming with actual inside knowledge or access to inside knowledge if they chose to set their minds to it?
Dom, its got to better than rewarding tax evaision by lowering the top tax bracket. At least Labour are waking up to the fact that they need to actually force these people to pay tax as they will do everything they can to avoid it no matter how low it is.
Monty trolling warning ban next time. Trevor
Tracey what I’m saying is that it’s very easy to say you’re going to “close the loopholes”. As Trev knows because he’s been in parliament almost thirty years, it’s one thing to say it and another thing to do it. As soon as you close one tax loophole another ten open up. Tax changes are really hard to pull off effectively, even introducing a tax free threshhold or big changes to marginal tax rates (both of which Labour are proposing), because it creates very real incentives for taxpayers to adjust their affairs to minimise the amount of tax they pay.
Trev also knows that increasing consumption tax and reducing marginal income tax rates is the easiest way to reduce incentives for people to look for loopholes. But Labour’s opposed to that too.
Every tax proposal Labour has come up with since the election, from the tax free threshhold, eliminating GST on fresh food, and increasing marginal tax rates at the top end to pay for it creates HUGE loopholes. Labour knows it and they’re telling deliberate porkies to say otherwise.
You’ve also got a credibility gap when you say you’re going to hit down hard on trusts and write-offs, when you don’t say you’re going to introduce a capital gains tax (which Labour hasn’t done), and when half Labour’s MPs deliberately structure their personal affairs to own property through trusts. Why do they do that? To minimise the amount of tax they pay.
Closing tax loopholes is a continuous job of government. It’s not a single thing you have a bright idea to do. It’s about protecting the revenue base and reacting to all the brilliant ideas that people have to reduce their tax on a case by case basis. If Trev has some bright idea now as to how he’s going to close all the major loopholes he should front up with it. He’ll win a nobel prize in economics for his efforts.
If they haven’t realised a loss or profit yet then why are they claiming it?
You may not have noticed but we’re already losing them. High taxes don’t force people overseas – low wages do.
As I’ve said before, that’s got to be the worst logic ever. It’s not founded in reality or even logic – merely a statement of belief.
If closing one loophole opens another ten then the extra ones were put in place on purpose.
Some of the best people to get advice on burglary prevention are previous burglars. So, talk to those who use loopholes to get help closing them. Frankly I dont believe the political will is there to truly close them.
IF everyone paid the tax they ought, we might find that by collecting more as a result, we can reduce the tax rates…
No I don’t concede that at all… There are so many things that are grossly incorrect in I/S’s post and therefore this one that it is staggering:
1). Trevor has stated that Barclay’s profits were 15,000,000,000 pds when they were actually 11,600,000,000 pds…
2). No Right Turn is closed to comments and one should never reference from such a blog as the writer’s gross mistakes are never pointed out to them, it also encourages them to defame people and call for evermore outrageous measures…
3). I/S’s source is the Guardian, also known as the Guardinista, or as I like to call it the Politburo Propaganda Daily… It is slightly to the left of Chavez…
4). The Guardian has included some of the info (just enough to avoid getting sued methinks) about Barclay’s while omitting plenty, to paint the tired old banks=evil line, I/S then filters this socialistic ephemera through his communistic filter and leaves out more pertinent info…
Such as:
5). 11,600,000,000 pds is Barclay’s global profits, they obviously pay tax in the country’s were they earn revenues and they have 100s of overseas subsidiaries… Would NZers be very happy if the Aussie banks paid no tax here on the revenues they made here but instead paid it in Aussie..? No of course not, Barclay’s global tax paid was 6,100,000,000 pds to government’s around the world – convinently left out by I/S…
6). So Barclay’s bonuses were 25% of the global taxes paid to governments, not 1000% as I/S tries to imply… Quite a difference…
7). 113,000,000 pds is solely the corporate taxes paid by Barclay’s, when payroll taxes and NHS levies, etc are totalled they paid they paid 2,800,000,000 pds to the UK government… So Barclays did pay towards libraries and schools and provided jobs that paid payroll taxes to do the same and funded a chunk of the NHS again through employment…
8). The Guardian article never states whether the global profits of 11,600,000,000 are EBITDA or nett, a typical Guardian trick… It makes a huge difference of course and I’m guessing it’s before… When the bank has a large bailout loan a lot of the Interest would be flowing to the government balance sheet as repayments…
8). The only MPs shocked are the hard left ones who are largely irrelevant – even with Red Ed in the driver’s seat and the the UK Uncut group is the usual eco-loon, union and socialist anti-capitalist suspects…
9). If Barclay’s can use tax minimisation strategies such as registering on offshore English Islands good for them, they keep 100,000s of jobs in London, instead of Zurich, et al by doing so… They compete on a global scale which is tax sensitive… Those islands have their own Parliament’s and set their own tax rates and laws… Your average UK MP understands that by utulising such tax strategies they attract capital to the UK and jobs… London’s future as a financial centre is flimsy at the moment, you’d have to be nuts to risk it…
So the whole issue is a massive beat up by I/S – as per usual, which Trevor fell for…
Jeremy, the large investment banks are a drain on the real economy. And when times are tough they feed out of the public trough to the tune of tens of billions of pounds.
By the way I believe that your figure on global tax paid on Barclays profit is way way WAAAAAAYYY overblown.
You claim that Barclays paid more than 50% tax on their profits? That’s crap and you know it. Because Google got away with paying less than 3% on their international profits.
Frankly your defence of wealthy ruling class capitalists always impresses.
Send them away who gives a damn. Like those insisting Peter Jackson would decide to live in Ireland for the next 3 years to film the Hobbit
Here’s a fun factoid, the Australian banks make $45 profit a month for each man woman and child in NZ. Most of those $ gets shipped back to Australia to support the lifestyle of Australian shareholders.
So thanks to all you nice New Zealanders for selling off your banking assets to them, I’m sure they really appreciate the fact that they now deliver significant living standard and fiscal benefits to Australia instead of NZ.
It’s from the article linked by I/S… Go away and have a read before attempting to comment because your irrational hatred of the wealthy always impresses, as does your cavalier attitude towards the jobs of 100,000s of Englishmen…
Jeremy…what a joke. Firstly, you said some numbers in the Guardian article were rubbish. You also tried to discredit the Guardian as a publication. But then you cherry picked some other numbers from there as being true!
Now, how did you decide between the two mate? Because you claim, that the Guardian is actually the “Politburo Propaganda Daily” yet you also quote it when it suits you.
Whoops, what a hypocrite.
You’re also a hypocrite by trying to imply that Barclays paid that £6,100,000,000 sum of tax on its global profits. Of course it did no such thing. That is its global tax paid in all forms, including RWT and GST or the international equivalents thereof.
No my friend, I’m leaping to the defence of ordinary working folk who had no hand in the financial disaster, who were forced to payout tens of billions of pounds in bail out money to private companies and are now losing their jobs by the hundreds of thousands as a direct result of the GFC.
I think my feelings on this are quite rational. As are yours, you clearly know which side your bread is buttered on my friend.
The financial sector needs to shrink to <10% of the global economy. Jobs need to go, the big banks need to be broken up. No more too big to fail. Banking should become a boring tedious, cost plus small margin industry. Thats it. Get used to it buddy.
***BUT*** of course that's of course not what is happening. Instead what is happening is that while the financial sector is booming and executives are back to their multi million pound payouts, ordinary workers: teachers, policemen, soldiers, council workers, process workers, tradesmen, builders, administrators, public sector middle managers are all being made redundant.
The financial sector is literally a leach on the back of the real productive economy and on the back of social services. It could not survive as an industry without constant tax payer handouts. You are backing a failed industry which has lost as much money as it has ever made.
Jeremy your favouring of the rich cats over the real productive economy is quite legend.
And trust me, I love the rich I really do. Just less so when they screw over the middle class and the working class. I'm even less impressed with the likes of you who follow them around with the air of a fawning butler.
The financial sector needs to be broken up and broken down Jeremy. No more too big to fail. Thats about all there is to it.
Maybe inside your power hungry little world…
There was, and is, of course the option of not bailing out banks that fail, just as Iceland did and as free market economics predicts the bad debts have been expunged and they are back to growth, not flailing around in stagnation like those that followed interventionalist policies…
Maybe one day you’ll realise that the market simply comprises peoples needs and wants and you cannot control and manipulate it – it will always return to reality, the best you can do is punish those committing theft and fraud and have the humility to step back, I’m not holding my breath though…
I’m always amazed the ability of the Right to attribute their own characteristics to others.
No it doesn’t. You’re still buying into the neo-liberal concept of homo economicus.
Did you notice how few wealthy bankers got jailed for their multi-billion dollar thefts against ordinary working people?
Of course not, you’re their butler.
Sorry I already told you, the power structures of the west wouldn’t allow this. The plutocracy runs the democracy – that’s why hundreds of billions of bank bail outs were authorised.
The big banks are not ‘flailing around’. Their plan for growth has worked just fine. But ordinary workers and citizens have suffered economic despair as a result.
But, go on batting for the wealthy Jeremy, you clearly know which side your bread is buttered on.
No substance as per usual CV…
After you consult with those who tell you how to think over on The Standard maybe you can come back and try to dispute some of the points I raised… Better luck with your next effort after your first was to state,
and then I pointed out it came from I/S’s source, you know I/S, you’re his cheerleader…
Maybe you could go back to your other tactic of denying reality, saying that incentives don’t exist (that is essentially what economics is, the study of incentives and how they interact with people’s needs and wants – i.e. markets) when you pretend economics doesn’t matter, the better to try and morally justify your bankrupt philosophy…
Ouch Viper you really should learn when to give up. You discredited not Jeremys source but I/S.. who has gone all suddenly quiet on this issue. Wonder why? Probably the same reason why he doesn’t allow comments on his blog.
Neo-liberal economics doesn’t matter guys. Its fully discredited. People do not act in economically rational ways, full stop.
I stand by my quote Jeremy/Clint. The 6.1B figure is not tax paid on Barclays *profts*, please try and read.
Still cheerleading for the rich and wealthy eh? Like a good butler?
When you talk about having substance, all you have is a financial system which destroyed US$4T to US$7T of wealth in the last 3 years.
Sorry mate something is woefully wrong there, because the executives of that system are back making million pound bonuses, while ordinary workers in the UK are being fired in their tens of thousands a month.
I should qualify my comment that people do not act in economically rational ways.
At times, people *will* act in ways which are economically rational for themselves as *individuals*, at the same time as they act as agents on behalf of organisations in ways which will probably seriously damage the organisation.
For instance, the Chief Executive who exposes his bank to extreme high levels of financial risk, but does so in order to get his quarterly bonus. He gets the bonus, the bank fails soon after causing a large amount of financial, employment and human damage, but the executive gets to keep the multi-million dollar bonus that he has “earned”.
This is an example where a system favouring acting in the individual good cannot always (or even often) be expected to create results for the collective good.
@CV – “I should qualify my comment that people do not act in economically rational ways.” Very true, just look at the lefts take on economics.
lol. However economics as an academic discipline uses the term ‘rational’ in a very particular and unusual way. As if people do running comparisons of what decision has the most ‘economic utility’ for them (as if they would know) and act solely on that.
CV if you are going to resort to calling me a hypocrite, you really cannot make up statements and attribute them to me… I did not say any of the numbers the Guardian quoted were rubbish, I have no doubt they are all true – in fact I used them as the source in pointing out that Trevor transcribed the global profits incorrectly, they have to get it right because Barclay’s release 100,000s of copies of their annual statement to shareholders, one of which would easily confirm the accuracy of the reporting, if the Guardian appears to get it deliberately wrong they risk getting sued… What I pointed out is that the Guardian omitted whether profits are EBITDA, as well as presenting the numbers in a way that attempts to paint a certain picture, mixing in emotive language… I don’t have to discredit the Guardian, they do that themselves by their daily offerings…
So my challenge to you is to read back through this thread and see if you can find one, one, statement where I question the accuracy of the Guardian’s figures… Otherwise I’d ask you do the honourable thing – admit you made up the above statement and apologise for calling me a hypocrite… Again I won’t be holding my breath…
So tax isn’t tax unless it’s the kind of tax you deem to be the ‘right’ tax..? Such brainlessness and yet you have the temerity to call me a hypocrite…
This is simply your opinion, and honestly no one cares about what a socialist blog commenter from Dunedin (incorrectly) thinks about how the global economy works… That’s it… Get used to it buddy…
Yawn, the only difference between the super wealthy and the not so is that they have; inherited money, or in the majority of cases have taken the time to learn how money works or started businesses – there is no global conspiracy… I defend them because the irrational loathing of them from the left is not based in reality, it’s based in fear and hatred…
I never said they were, I was quite clearly talking about Iceland’s economy… Sheesh…
I’m going to let you in on a secret here CV, the 8 odd lunatics that inhabit The Standard aren’t the global authority on economics… In fact they seem to spend most of their time living on Planet Ostrich denying that economics even exists… See you’d know this if you ever read anything but hard left sources or posted on any right wing blogs to expose yourself to any counter opinions – expand your mind – but you can’t even seem to summon up the strength to defend yourself when DPF does a whole post about you…
I’m still waiting for a rebuttal of anything I said in the 9 points I made (apart from points that you made up, attributed to me, then argued against)…
Maybe you could try calling me a butler again – then you’d win the argument for sure…
Excellent Jeremy. One point though, you’ve missed pointing out the hypocrisy of the Guardian on the subject of tax evasion. For example, their recent investments in various overseas based hedge funds amassing vast profits, how its assets are held in the Cayman Islands where corporation tax is, um, zero, or how its directionless columnists (especially the queen of champagne socialists, polly toynebee) are kept sweet on high six-figure salaries.