Govt rejects tax haven claim

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Govt rejects tax haven claim

3News NZ

Peter Dunne says "tax avoidance" is legitimate, while "tax evasion" is not

Peter Dunne says "tax avoidance" is legitimate, while "tax evasion" is not

By Patrick Gower

Revenue Minister Peter Dunne says New Zealand isn't a tax haven for wealthy foreigners, despite a 60 Minutes report showing wealthy foreigners dodging Inland Revenue by using trusts here.

While some might call it tax evasion, Peter Dunne describes it as, in his words, “legitimate tax avoidance”, and the Prime Minister backs him.

“I think the term 'tax haven' is a gross exaggeration because it implies illegality, it implies evasion, rather than legitimate tax avoidance,” says Mr Dunne.

Even though the Inland Revenue Department website says tax avoidance is wrong, on this avoidance issue Prime Minister John Key says Mr Dunne has got it right.

“He'll be using the absolutely correct technical term. There's two things, going back to my days at university – tax evasion and tax avoidance,” says Mr Key.

“There's actually quite legitimate business in New Zealand for servicing foreign trusts.”

Mr Key says under the law tax evasion is illegal but tax avoidance is not. Green Party co-leader Russel Norman says that’s not fair.

“The Prime Minister is telling ordinary taxpayers, ‘You pay all the taxes, you pay for the schools and hospitals, and billionaires and the ultra rich don't have to pay tax.'”

Labour Party leader David Shearer also agrees the distinction is a false one.

"Tax evasion, tax avoidance – it’s basically the same thing,” he says.

There are 3 million New Zealanders who pay income tax. Mr Dunne wasn't commenting today, so on behalf of them 3 News asked Inland Revenue for a list of "legitimate tax avoidance measures" like those open to foreign trusts.

So far there has been no response.

3 News

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Comments

11/10/2012 2:35:55 p.m.

Mike wrote:

If those that scream loudest are guilty and avoiding justice - what does this say about Dotcom?

He only has a few hundred mil frozen in US accounts which he could get access to if he faced the music. The US courts even hand out huge damage claims, and if wrongly charged he could easily claim ove $1 billion in dmaages, and in US courts, probably get it!

How much tax has dotcom paid in NZ? We have the anti-US support for criminals in NZ that claim everyone is a criminal but them.

How much tax has Owen Glen paid in NZ. We know he has paid over $1 mil to Labour per year for over a decade, but we haven't been told what tax he doesn't pay in NZ?

11/10/2012 11:46:50 a.m.

Kay wrote:

So should we be taxing trusts based on the country of residence of the trustees or the settlors? NZ currently taxes on settlor residency - if the settlors are tax residents of another country we do not tax them here.

10/10/2012 3:00:24 p.m.

alison wrote:

@wiseacre, I have to agree. The ones that scream the loudest are the ones that dont pay there fair share of tax to support the system in the first place.

9/10/2012 3:37:51 p.m.

peter the rabbit wrote:

thats what all tax dodgers call it peter , look ive had a guts full man people like you done need a clip round the ears its the only language a life long mp like done would understand any more . he is brought and paid for by lobby groups mr done is .special intrest groups own peter dunn and this government that everyone now hates , and nobody beleaves the pm any longer or the media spin abmout him . for the first time i hear people say mr key is the worst pm new zealand has ever had .

9/10/2012 3:00:21 p.m.

Daniel wrote:

@David tax evasion is a criminal offense whereas tax avoidance is a civil offense the difference being you will not go to jail if you are found to be using a tax avoidance scheme but you will be liable to be sued by the IRD there is currently one case where a man used legal entities such as trusts etc to reduce the tax of a number of companies by millions of dollars but because it was considered a tax avoidance scheme as its main purpose was to reduce tax he was found guilty and charged with over $100 million in fines and interest if they get punished in the courts does that not mean it is illegal

9/10/2012 7:13:32 a.m.

Kathy wrote:

Brent, you mean the same way that National and the majority of parties do it?. Other than the money National get from Big Booze, corporate mining and dodgey bankers which is why if you watch National, their policies always heavily favor those groups. National also likely gets funding from fanatical right wing movements like the Exclusive Brethren as well. They can all improve Brent thats the issue, you are throwing stones in a glass house though if you think National are any less dodgey than Labour or whatever other party. What we need to do is stop allowing tax avoidance as a legal way for the wealthy to "EVADE" paying their taxes dont you think?.

9/10/2012 7:12:58 a.m.

Pete George wrote:

There's a fundamental difference between tax avoidance and tax evasion. Dunne did respond: "Revenue Minister Peter Dunne today announced that New Zealand will be signing a multilateral convention on tax assistance later this month, as he dismissed claims that New Zealand is a tax haven for foreign trusts."

9/10/2012 6:37:05 a.m.

Brent wrote:

Are you trying to destroy the Labour Party Patrick, Next you will be telling stories how Labours Main donors come from trusts they control,

8/10/2012 10:10:27 p.m.

Kevin M wrote:

"Cough cough",so who are we hunting here......

8/10/2012 10:02:45 p.m.

Kahu wrote:

Of course Peter Dunne and John Key think tax 'avoidance' is legitimate: We get the politicans we deserve. NZ doesn't believe in old fashioned things like fairness and equality: we believe in modern success, get rich quick, stamp on others to get what you want, and survival of the fittest. Why should rich politicans like Mr Key and Mr Dunne pay their fair share in taxes when there's plenty of plebs around who will do it for them? That's not immorality: that's ingenuity. Its not tax evasion: its tax avoidance. No wonder NZ has the fastest growing rate of inquality in the entire OECD. We've completely bought into the US dogma about the rich being industrious, savvy and deserving of all the lucky breaks tbhey get, and the poor being lazy, stupid,and undeserving, because that's what enables our richest and most selfish to justify the otherwise unjustifiable. NZ has one of the lowest tax rate for high income earners amongst all OECD countries. All income over $70,000 is taxed at the absurdly low rate of tax of 33 per cent, NO MATTER HOW MUCH OVER $70,000 YOU MAKE. Compare that with a top income tax rate of 45% in Australia and the UK. Billionares like Dot Com and James Cameron aren't attracted to NZ by the scenery or good old homely NZ friendliness: They're attracted to NZ beause its with its lax trust laws, lack of capital gains tax and bargain-low tax rate for high income earners, its one of the best places to live if you're loaded and want the poor plebs to subsidise your tax bill.