A matter of trust

09/05/2016

The left hoped this morning’s release of the Panama papers would be a bomb that would blow up the Prime Minister.

As has happened every time they’ve tried it, all they’ve delivered is a damp squib.

Rather than being a critical blow to the Government, political commentator Chris Trotter says so far, the Panama Papers revelations have been “meh”.

The entire database of 11.5 million documents will go online on Tuesday morning, but some New Zealand journalists — led by Nicky Hager — have been given early access.

They’ve revealed 61,000 of the documents, leaked from Panamanian firm Mossack Fonseca, mention New Zealand. But there is no evidence our zero-tax foreign trust rules are being used for illegal purposes. 

That looks like a big number but 61,000 is less than one percent of the 11.5million documents in total.

“Like a good leftie I was salivating this morning at the prospect of what I was going to come across at [6am],” Mr Trotter told Paul Henry on Monday.

“I read it and I went ‘meh’. This will be the best that they’ve been able to find to date.” . . 

“If you’re going to bring down a Prime Minister… then you’ve got to have something that links the Prime Minister not only to something that has the perception of dodginess but that is actually illegal. Nothing to date that I’m aware of has pointed to any kind of illegality at all,” says Mr Trotter.

“It will be a major issue for a little while, then, as has happened so often before, the Prime Minister will move on.”

While Mr Hager says the Panama Papers conclusively prove New Zealand is a tax haven, PricewaterhouseCoopers tax expert Geoff Nightingale says the present rules are “orthodox” and “not uncommon”.

“We need to think about our reputation — it’s a critical business asset. But there’s nothing broken around the tax treatment of these foreign trusts. These are foreign assets and foreign income of foreigners — all we’re doing is administering them.”

New Zealand is a tiny blip on the international radar. Any damage to our reputation will come from opposition politicians, conspiracy theorists  and the media who are trying to make this look like a scandal when it isn’t.

The OECD consistently ranks our tax rules highly; the government has appointed a tax expert to do a review and has undertaken to make changes should the review deem that necessary.

It’s a matter of trust. Our laws and regulations are robust and trusted internationally and should the review uncover any problems they will be addressed.

The key difference between New Zealand and a proper tax haven is we have rules around disclosure.

“We don’t want to be facilitating illegal international activity and we don’t want to have a reputation for that, and the way we deal that is by being clear about who we’re dealing with and what are the assets and where is the income being distributed.”

Mr Nightingale says a review undertaken by John Shewan, former PricewaterhouseCoopers chair, should be broad enough to fix any reputational issues.

“It’s got the disclosure rules in there, it’s got the anti-money laundering rules in there.”

New Zealand has disclosure rules with several countries. If other countries don’t want us to disclose information on trusts affecting their nationals and companies that is their issue not ours.

Any risk to our reputation is one of perception, and that perception is not based on reality but the ridiculous claims New Zealand is a tax haven when it  isn’t.


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