Friday, November 08, 2013

Dubious recognition

Congratulations, everyone! New Zealand has just been recognised as a tax haven!

New Zealand has been recognised as a tax haven by the Tax Justice Network for the first time today, the Green Party said.

The Tax Justice Network produces the most comprehensive report of tax havens and today ranked New Zealand for the first time on its Financial Secrecy Index. New Zealand features on the Index due to our lack of transparency around foreign trusts and registered companies, and our below-average levels of co-operation with other countries when it comes to fighting international tax evasion.

The full index is here. New Zealand ranks 48th, in the middle of the range, but we still have an excessive level of secrecy. According to our entry [PDF], we don't properly curtail banking secrecy or require the ownership of companies to be publicly disclosed, we do not require all companies to publicly disclose their accounts, and we allow some harmful legal vehicles (such as those "foreign trusts" which are a perfect vehicle for tax-evasion and money-laundering). The only reason we're not ranked higher is because we have such a tiny proportion of the global financial services market.

This recognition isn't something we should be proud of. Rather, its something we should seek to end. Tax havens rob governments of revenue, and therefore they rob people of social services (while imposing a heavier burden on those not rich enough to afford to launder their money in this way). Its anti-social, and not the sort of thing a responsible member of the international community should do. We need to stamp out those trusts and introduce greater transparency into our company law. But when our Ministers talk of "legitimate tax-avoidance", there's little chance of that happening.