David Clark
Revenue Spokesperson

14 February 2013

Dunne must take leadership on overseas tax

Peter Dunne must act on an OECD report that reveals the shocking extent of multi-national tax avoidance, says Labour’s Revenue spokesperson David Clark.

“The state of the tax take in New Zealand is dire. Yesterday Bill English confirmed there has been another significant drop in projected tax revenues. Since the election the projections to 2016 have fallen by $13.2 billion. We need to make sure every company is paying its fair share.

“Last year Peter Dunne defended ‘legitimate tax avoidance’ and our transfer pricing rules. The OECD report shows Peter Dunne is out of touch.

“We welcome his road to Damascus conversion. He is now talking tough but is scant on detail. He needs to outline a credible plan and take leadership in this OECD debate, before the multinationals see the emperor has no clothes.

“Peter Dunne has been far too slow to acknowledge the effect that international tax avoidance has on New Zealand. Instead of being one of John Key’s ‘fast followers’ he is way behind the pack.

“My revelation last year that international giants like Facebook paid just $14,000 in tax is the only reason Peter Dunne has been shocked into action. But still he only inches along.

To continue to kick Peter Dunne off the couch into action I suggest four possible actions.

• Back OECD measures to increase transparency requirements for multi-national companies.
• Establish the size of the problem in New Zealand.
• Level the playing field for New Zealand companies by requiring government to take into account the economic effects of procurement, which will reduce tax sent offshore.
• Explore taxing country of origin revenue flow to ensure that profits raised here are taxed here.

“In addition to eroding the funds that support our health and education services, current tax law leads to an inefficient allocation of resources by distorting investment decisions to activities that have lower pre-tax rates of return but higher after tax rates of return.

“The current system also undermines voluntary compliance by all taxpayers, which is the basis of our tax regime,” says David Clark.

ENDS

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