Hard News: Forgetting what we didn't know
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william blake, in reply to
Please excuse the further thread Jack but we can all publicly acknowledge Cameron Slaters' hypocrisy in seeking name suppression. What an ass.
And back to the Panama papers with John Key calling Nicky a 'left wing conspiracy theorist', the rebuttal being that the papers suggest that Key is a right wing conspiracy practitioner.
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Alfie, in reply to
Good column by the Herald's Matt Nippert on getting access to the data today:
And another from Alex van Wel, RNZ's digital news editor on the spirit of cooperation between normally competing media.
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To be honest, I really don't understand the big story here. Deborah Russell's piece in the Spinoff http://thespinoff.co.nz/10-05-2016/foreign-trusts-101-a-plain-english-introduction-amid-the-panama-paper-haze/ seems to be the clearest analysis I have read, and the bottom line there was that we should improve our disclosure rules. But the tax regime for foreign trusts wasn't invented by the current Government. The whole John Key-Ken Whitney thing is kind of interesting, but its hardly Dirty Politics, let alone Watergate. And even Dirty Politics turned out to be a damp squib in the end, at least in terms of the general election.
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Really? After all this time you still think the PM has scandals waiting to be uncovered that will lead to his downfall?
He only holds parliament by one seat, a downfall for the national party is not to be in power and when they lose he's out.
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Nick Russell, in reply to
True, but this is hardly a gamechanger. Anyone who already thinks the PM is dodgy will continue to think he is dodgy and anyone who doesn't will continue to think that Labour and the Herald are like dogs chasing a car. Nobody is changing their mind about anything over this. Hence Garner's irritation.
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Tom Johnson, in reply to
It's called ethics and its very important, larger than the little westminister we have here. It just needs to be called on by both sides, banking is out of control, lawless. Laws are needed.
On John Keys popularity , its not gonna be a seismic shift , New Zealand doesn't move left with any great ease, it will be an acknowledgement that Ministers who can't do their job or refuse to do their job properly are bad for the long term growth of this country. It's a very poorly read party, just sits there blocking labour.
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Russell Brown, in reply to
But the tax regime for foreign trusts wasn’t invented by the current Government.
True. But the money flowing into such trusts has sharply increased in recent years and under the current government a consequent regulatory review signalled by IRD somehow went missing.
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Nick Russell, in reply to
Yes, but as Deborah Russell explains it isn't NZ's tax base at risk, and there is no evidence of tax evasion (illegal) - only tax avoidance (legal). So it's not exactly scandalous that IRD let it drop. The best argument to the contrary is that allowing this to continue could be damaging to NZ's international reputation. But that's exactly the sort of political call we elect Governments to make.
The Government has now it seems been shamed into some sort of action, But it remains to be seen whether NZ has suffered any real reputational harm over this, or whether it will suffer any drop in support. I'm picking "no" to both, but I guess time will tell.
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Marc C, in reply to
I do not have unreasonably high expectations that anything comes out that will harm Key so much he has to resign as PM. But I think the Panama Papers deserve to be taken seriously and represent an opportunity to do some more investigative work. If some stuff was done that just underlines what we know of Key already, and that may reveal a bit more of his “smiling assassin” side, people may gradually start to realise, he is not just Mr Sunny-boy Do Lucky, who they should let get away with anything.
Sorry, I do not subscribe to the “nothing to see, move on” approach. The GFC should have reminded us what merchant banks were and still are about. But, oh, when was that again?
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Nick Russell, in reply to
Isn't this just "wake up sheeple"? If you want the National Party out you are going to have to persuade at least some of its supporters that they should vote Labour or Green. It is just possible that telling them that the PM is really bad and that they are too daft to understand they have been conned may not be an effective strategy. It has been remarkably ineffective so far. But whatever. Keep doing the same thing and eventually you will get a different result, right?
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Russell Brown, in reply to
Yes, but as Deborah Russell explains it isn’t NZ’s tax base at risk, and there is no evidence of tax evasion (illegal) – only tax avoidance (legal). So it’s not exactly scandalous that IRD let it drop.
But Deborah Russell also says New Zealand is definitely a tax haven, a thing the Prime Minister continues to strongly deny. That's a story right there.
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It's also worth noting that the current government also passed the SOP that created the highly fashionable international tax avoidance entity the look-through company, or LTC.
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Deborah, in reply to
Yes. I’m on record right from early April saying that I think this is a tax haven: What’s going on with foreign trusts.
What’s going on with NZ foreign trusts may not be illegal, but it certainly allows overseas people to hide their income and assets, and engage in some very aggressive tax minimisation practices, all very secretively. That to my mind means that we are offering a tax haven in respect of these NZ foreign trusts.
(BTW, Russell, if you have access to the back end of the registration system, I'd quite like to use my family name as well as my given name at PAS. But this is hardly an urgent matter: I think all the regulars are very well aware of who I am.)
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Deborah, in reply to
Yes, but that's another one with an unintended consequence. However the purveyors of the finest tax minimisation vehicles seem to have cottoned onto their potential uses much more quickly than they did with foreign trusts. I wonder if that's because we had somehow primed them through our foreign trusts rules, so that they were much more alert to their possibilities.
In any case, as far as I can make out, in order to make the best use of an LTC (or worst use, depending on how you view these things), you need to combine it with a foreign trust. So reducing the activities of NZ foreign trusts would also reduce the use of LTCs for tax minimisation purposes.
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Sofie Bribiesca, in reply to
Some research may be worthwhile to dig further into his past,
Be careful.lt may come back to bite you in the arse.
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Russell Brown, in reply to
(BTW, Russell, if you have access to the back end of the registration system, I’d quite like to use my family name as well as my given name at PAS. But this is hardly an urgent matter: I think all the regulars are very well aware of who I am.)
No problem. I can't do that myself, but I'll ask the cool kids at CactusLab to do it when they have a moment.
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Marc C, in reply to
Come on, that is a simplistic thought, and negative. Labour’s and perhaps to some degree also the Green’s challenge and problem has been to present a unified, convincing and clear policy alternative, a platform and progressive direction, that they do not sway from.
But after much talk of reviewing policy, of developing new policy, after the last election, we had too little clear policy announcements, or policy formation even. And what was announced was rather half baked, like the tertiary education policy offering everyone three years “free” education, we got some “thoughts” about a UBI, which was quietly laid to rest again, we still don’t know whether “Kiwi Build” will be maintained, and the Greens seem to be very careful also.
Instead they have almost desperately been looking for faults with the government, with Key and so, of which there have been enough, but nothing was attached in a clear, concerted and resolute manner. A bit tit for tat here and there, a bit nagging there, a bit stinging there, but no clear attack line.
Besides of showing failures of a government the opposition does of course need to present itself as an alternative government in waiting. We are still waiting for that, not because of the attacks, the people are simply not convinced of leadership and direction, I fear, particularly with Labour. James Shaw is still a bit of an apprentice, so he needs to learn more of the ropes. Bolder policy, firm, reliable goals and smarter solutions, that is in my view what is missing.
And besides of all that, the “missing million” (it will never be all or most of them), at least a fair number of them, must be attracted, involved and reached out to, this does NOT seem to happen.
So do not simply come with criticism of the opposition doing its job, attacking the government, the problem lies elsewhere. Voters simply stick with Key and Nats, because they are not convinced enough of the alternative.
Thinking people love Key so much, they forgive everything he does, is as much a myth as thinking the mythological “centre” is the only part of society that will change the political landscape.
Sadly Labour seem to think they just need a new IT system, and that will do the trick, but they are misled, there are other issues.
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Marc C, in reply to
I do not quite get whether you mean that in relation to Key or me, they have certainly not made my life any easier over recent years, I can attest to that.
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Deborah, in reply to
A bit more on Look Through Companies, mostly cribbed from a comment I've just put up over at The Spinoff.
Look Through Companies are interesting beasts. The idea is that tax is calculated and paid in the company, but instead of using the company rate, each shareholders' portion of the profit is calculated, and then each portion is taxed at the relevant shareholder's marginal tax rates. After that, no more tax is payable, and when profits are distributed to shareholders as dividends, no tax is payable, because the correct amount has already been paid.
We don't claim to tax income that is earned overseas by non tax residents. So if a non resident shareholder earns income from overseas assets, and it's channeled through a Look Through Company, then the tax rate on that income is 0%. That's because her marginal tax rate is 0%, because we don't tax overseas income earned by non-residents.
So yes, Look Through Companies can help in tax minimisation schemes. They're a bit more open than foreign trusts, and IRD can see inside them and collect information about shareholders, which can then be shared with other tax jurisdictions on request. One way to make them less open to scrutiny is for the shares in the Look Through Company to be held in foreign trust, which is not open to very much scrutiny at all.
But it looks as though the government is going to change the rules for Look Through Companies, with papers going to Cabinet this week: Government may change tax rules for 'look through companies', says Key.
Last I saw of those changes, IRD was proposing to limit the amount of foreign income that could be earned by a Look Through Company, or it would lose its look through status. I think the limitation was going to be something like the greater of $10,000 of foreign income, or 20% of gross income, if more than half the shares were owned by non-residents. That was work by IRD that was underway last year, so long long before the Panama Papers broke.
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Thanks Deborah. That was beautifully clear and useful!
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Martin Brown, in reply to
Mainly since we introduced LookThroughCompanies (LTC) in 2010.
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Matthew Hooton, in reply to
But Deborah Russell also says New Zealand is definitely a tax haven, a thing the Prime Minister continues to strongly deny. That’s a story right there.
That's now a story. That a difference of opinion over a definition. And while Nicky Hager's interpretation sides with Deborah's, the OECD's sides with Key's so you take your pick.
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Russell Brown, in reply to
That’s now a story. That a difference of opinion over a definition.
Good try Matthew!
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And here's last's night's Media Take, on demand.
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Matthew Hooton, in reply to
But it is just a difference of opinion. The OECD does not think NZ meets its tests fort a tax haven. That Deborah, Nicky and Andrea Vance think it does is interesting but not decisive.
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