Monday, October 04, 2021

A financial fence

The International Coalition of Investigative Journalists released its latest look at the theft of the rich and famous overnight, it he form of the andora Papers. There's the usual assortment of billionaires, thieves, and oligarchs - increasingly overlapping categories - and the usual famous names (oh look! Tony Blair's a tax cheat!) And of course New Zealand has its usual role: a Moldovan oligarch who stole 12% of his country's GDP before fleeing used New Zealand to launder his ill-gotten gains, thanks to a low-oversight, tax-free part of our financial system. There's a name for this: effectively we were acting as a fence for stolen money. If someone had done that over, say, a television set or laptop, they'd be charged with receiving and face up to 7 years in jail. But when rich people and lawyers and accountants are involved, everyone just looks the other way. Only poor people commit crimes. Rich people pursue business opportunities.

Supposedly reforms after the last big leak in 2016 closed some of the loopholes which made this possible, requiring trustees to identify beneficial owners to IRD. But its still all very lax - people can just lie - and the big loophole, the trust's tax-free status, is still unplugged. Which means New Zealand is actively soliciting tax cheats to funnel their money through here, so local lawyers and accountants can clip the ticket on the way.

Does the "centre-left" Labour government have any plans to close this loophole, and prevent new Zealand being used to effectively steal from other countries? Of course not:

Closing a tax loophole that could be allowing global elites with foreign trusts in New Zealand to avoid paying tax is not a priority for the Government.

The Revenue Minister David Parker told 1News a small tax loophole for foreign trusts in New Zealand still exists, and acknowledged "the concern is that there could be some people who are paying no tax anywhere".

"We don't think it's a risk to the New Zealand revenue base it's a question as to whether there's a fairness to the tax system overall internationally."

There's no question at all: this loophole enables tax cheats, and allowing it to continue to exist encourages tax cheating. That is being a poor international citizen, and a poor neighbour. An ethical government would close it. You can draw your own conclusions about whether Labour fits into that category.