New Zealand joins the club of countries denying they’re a tax haven

Posted on

As the New Zealand Herald reports this morning:

Revenue Minister Peter Dunne is dismissing a suggestion New Zealand is a tax haven after criticism over his "legitimate tax avoidance" comments.

In an interview aired by 60 Minutesyesterday about foreign trusts, Mr Dunne said the term tax haven was an exaggeration because it implied illegal tax evasion rather than "legitimate tax avoidance".

"There's nothing sinister about that - minimising one's tax has always been within the law, that's the difference between avoidance and evasion," he said.

He joins a long line of tax haven ministers saying they don't run tax havens. Indeed, the denial is in many ways the surest sign of the truth in these cases. Anyone can spot a tax haven: they're like elephants. You can always tell one when you see one and there's always a technical loophole that lets you deny the truth at cost to your credibiluty.

In this case the challenge to the minister's credibility comes from the New Zealand Labour Party (who, it should be said, did little about this when in power to my recall). MSN reports:

Wealthy foreigners are stashing their money in New Zealand and using the country as a tax haven, Labour says. Revenue spokesman David Clark says the number of foreign trusts operated by "overseas billionaires" has almost doubled since the government came to power in 2008, and they're getting away tax free.

"There is a serious ethical issue here," he said on Monday.

"These people, who are often rich families in poor countries, aren't paying their fair share and that's not something New Zealand should be supporting."

Dr Parker says New Zealand is in danger of losing its reputation as an ethical and respectable country.

He's right.

MSN also quote Dunne:

Mr Dunne says legislation for taxing trusts was introduced in the 1980s and is fully transparent.

"Deliberately artificial tax structures designed with the purpose of defeating New Zealand's tax laws will attract Inland Revenue's scrutiny."

Which I am afraid shows just how willing he is to deny the truth. The whole point of this trust law is that there is no NZ tax issue arising from its use by a foreign person, so the Inland Revenue in NZ will never have reason to investigate.

By his own misinformation does Mr Dunne confirm the truth.

And for those who want to know just how New Zealand does operate as a tax haven, read this.