Most of us pay our fair share of tax and contribute to funding the public services we all value like schools and hospitals. Yet some big businesses use clever accounting to avoid paying tax here.
We can all think of wealthy people and corporate CEOs who do the right thing. They pay their taxes, and contribute to society in a number of ways. As they should. Unfortunately there are others who do the opposite - they hire fancy accountants and lawyers to weasel their way out of paying tax in New Zealand through offshore transfers.
That’s not fair to those who do the right thing by choice and it’s unacceptable to the rest of us who pick up the tab - schools and hospitals don’t fund themselves. It’s time to shut these loopholes and make an example of those who continue to seek them out. No more special passes for the rich and powerful.
These tax dodgers use a mechanism known as ‘diverted profits’ where they make a lot of money here in New Zealand, off all of us, and then siphon those profits offshore to places with lower, or no, tax rates. This makes it look like they make little or no money here, so they don’t pay tax on their income like the rest of us. Meanwhile, they’re accumulating vast amounts of wealth around the world, depriving people in those of the crucial public services we all rely on, whether we are rich or poor, like our roads and hospitals.
When they do this, we all lose. By not paying their tax here we miss out on hundreds of millions of dollars which could be used to restore our desperately underfunded health system, clean up our rivers, fund our public service broadcasters, and build more homes to resolve homelessness.
This is easy to fix. The Government could implement a Diverted Profits Tax, as they recently did in in Australia and the UK after citizens campaigned for it.1
Add your name to increase pressure for this crucial tax.
The Government is moving in the right direction. Last year, after we launched our campaign highlighting the fact that two thirds of New Zealanders were concerned about tax dodging2, then revenue Minister, Michael Woodhouse, pledged a crackdown on exorbitantly wealthy tax avoiders.3 Up to now, no concrete steps have been taken, but the Government has promised to report on their plans in February.
Unless we keep the pressure on, and make it very clear that the people of New Zealand want these loopholes closed, the Government may shelve the reports, cherry pick only the easiest and least effective recommendations, or do nothing at all.
We need to ensure they follow their talk with action. Closing these loopholes, and ensuring the wealthiest companies in New Zealand pay their fair share will start to turn around the absurd and alarming fact that currently the two wealthiest New Zealanders have as much wealth as the poorest 1.4 million amongst us.4
A diverted profit tax is not the only solution to this problem, but it is an important first step. If we can get this changed, we'll be helping to create the conditions and conversations needed to close other tax loopholes, and restore some fairness in our country.
People-powered campaigns worked in the UK and Australia and we know it can work here if enough people get behind the call. Take action now.
Marianne Elliott: Public anxious to see Govt action on tax dodging, NZ Herald, May 5 2016
Revenue Minister Michael Woodhouse pledges crackdown, Interest, Nov 16 2016
NZ's two richest men own more wealth than poorest 30%, Oxfam NZ, Jan 16 2017