Increase the Tax on Profiteering Aussie Banks

Increase the Tax on Profiteering Aussie Banks

News that the Big Five Australian-owned banks made a combined NZ profit of $3 billion in 2011 means only one thing – they’re making too much money out of us. They must be laughing all the way to the bank. Hang on, they are the bank.

These banks always make a big PR fuss about how much they contribute to the NZ community. But these are exactly the same banks who, in December 2009, settled out of court with IRD for attempting to dodge payment of an astonishing $2.2 billion of taxes that, between them, they avoided via deliberately complicated structured financial transactions. And that out of court settlement was for 20% less than what IRD was seeking – plus they would have had to pay costs if they’d persisted in going to court and losing (two of them had already lost in court before they all decided to throw in the towel).

So that's how they rode out the recession, by not paying nuisance costs such as taxes. Not an option for the rest of us mugs who have to pay our taxes, whether we like it or not. This was the biggest tax avoidance case in New Zealand’s history – and it happened at the same time as the deposits in those Australian-owned banks were guaranteed by New Zealand taxpayers (who got no say in the governance of those banks).

As a result they paid 47% more tax in 2011 than they did in 2010. But they still sucked $3 billion out of the country. These super profits need to be taxed more. This comes at a time when the Government is wringing its hands about how is it going to finance NZ’s recovery from the global financial crisis? Its’ only ideas are to borrow more; sell public assets; slash the State sector and public services; and bash beneficiaries. Here’s an idea – instead of grinding the faces of the poor to pay for a global crisis caused by the crimes of transnational banks, it should raise the tax on the transnational banks that are creaming it here in this country.

Specifically the Government is asking loaded questions about how will Christchurch’s multibillion dollar post-earthquake recovery be financed? There are less than subtle hints about flogging off Christchurch’s large and very valuable portfolio of publicly-owned assets. Wrestling back some of the ill-gotten gains of the big foreign banks is a much more palatable alternative. Make the rich pay.

That would be poetic justice in the case of at least one of those Aussie banks. One of the reasons why Westpac was selected as one of the eight finalists for the 2011 Roger Award* for the Worst Transnational Corporation Operating in Aotearoa/New Zealand was because, shamefully, it pressured its Christchurch tellers to meet normal sales targets by pushing loans and insurance products onto financially stricken Christchurch customers after the earthquakes, adopting a “business as usual” policy. That bank can definitely afford to pay more tax. It paid its’ Chief Executive Officer $5.8 million and $5.4 million respectively, over the past two years, making him the highest paid CEO in NZ.

Squeeze them until it hurts. They’ve been bleeding NZ dry for too long