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It is interesting to see that the government has announced its plans to get tough on multinationals who are aggressively exploiting loopholes in the tax laws to (sometimes significantly) reduce their tax obligations.
Taking a break from its advertorial/tabloid publishing for a moment, the NZH published this story on the subject this morning.
As someone who agrees that many of the multinationals are playing the system to the cost of regular folk who work hard pay their taxes, I have to say I was happy to see the government exhibiting some testicular fortitude. Previously, Key and his cohorts had claimed that it would be too difficult to address this problem as a single nation and that it was something which could only be fixed by international action.
It seems that the new PM, Mr English may have a different opinion perhaps.
However, all is not as it might first appear and some of the worst offenders will not be subject to this new targeting by the IRD.
According to the NZH story "The discussion document notes its package of policies would be unlikely to affect companies without a material local presence who have attracted recent headlines, an oblique reference to high-profile internet-based firms"
Why exempt these internet companies from a policy change that would require them to pay, not just the legal minimum but actually their fair share of tax.
Why are we prepared to allow the IRD's lawyers to dump on a couple of dental surgeons who chose to structure their tax affairs so as to minimise their legally due tax -- yet are giving huge multinationals based online a "get out of jail free" card?
But wait, it gets worse...
Revenue Minister Michael Woodhouse has been quoted as saying "If we start playing silly games with this stuff and over-reach in our attempts to claw back from multinational companies, Fonterra may be subject to the same thing".
Is he saying that Fonterra are engaged in similar devious tax arrangements in other countries so as to dodge tax?
If so, why would we want to protect them from being subjected to the same clamp-downs that the government says its planning for multinationals who cheat on their NZ tax by way of double-Irish and other strategies?
Isn't this just a little hypocritical?
Either this type of tax dodging is okay or it's not. You can't say that it's okay for NZ companies to dodge their tax overseas whilst also pinging overseas companies that do exactly the same thing here.
Or is this simply more proof of my belief that hypocrisy is the currency of politics?
I've lost track of the number of times that an NZ government has engaged in bouts of "do a we say not as we do" -- something that is surely the ultimate act of arrogance and contempt against the people by its politicians.
And why not go after these Net-based multinationals?
Surely, if companies such as Netflix and others are prepared to act as unpaid tax (GST) collectors for the NZ government when they have no legal obligation to do so, they would also respond favourably to demands that they pay their fair share of tax here. Surely if we're not going to see retribution from foreign governments when their companies have to act as GST collectors for the IRD then we're not going to see Fonterra pinged just because we prevent tax dodging by their companies in NZ.
When I see this kind of hypocrisy I can't help but start thinking "who's sleeping with who?" and which group or individuals are looking out for their own best interests rather than the best interests of the nation?
What do readers think?
Does something smell here?
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