Labour’s tax avoidance policy redundant

Revenue Minister Todd McClay has accused Labour of announcing policy on tax avoidance that either misses the point or is completely redundant.

“This National-led Government has an unprecedented record of stamping out tax avoidance. Budgets 2010, 2012 and 2014 included around $330 million of additional spending on tax compliance activities,” Mr McClay says.

“We are seeing some outstanding results from this investment.”

“In 2013 compliance work for ‘hidden economy’ tax evasion gave a return of $45 million, $5.60 for every dollar spent. Going after aggressive tax planning identified $206 million of discrepancies, a return of $42.90 on every dollar!”

“As for the proposal to ‘embed’ IRD auditors to catch multinational tax avoidance, once again this is redundant.”

“Inland Revenue already has in place the Significant Enterprises Initiative targeted at multinational companies and other organisations with an annual turnover in excess of $80 million. These companies are required to provide IRD with copies of their financial statements, tax reconciliations and group structures at return filing time.”

“For the 60 top tax paying corporates, an IRD compliance manager is assigned to sort out tax issues in real time. This lets IRD examine a wider range of multinationals more closely and as a result, multinationals receive far more tailored information requests and audit inquiries.”

“If Labour thinks their policy will make one dollar of difference to Google, Facebook or Apple they need a reality check.”

“New Zealand does not have tax jurisdiction over companies that are not based here, the only way to solve global tax avoidance issues such as base erosion and profit shifting is through international cooperation at the OECD and G20, which is why we are so heavily involved in those initiatives.”

“I suppose we can be thankful that Labour has at least flip-flopped on banning Facebook,” says Mr McClay.

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