November 27, 2021

Moral of the story [“More white beaches such as Cayman Islands”]

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LS2016_32_panama_521585322By Bill Ralston In Life From New Zealand Listener

Whatever the technicalities of foreign trusts might be, the very smell of the things wrinkles our noses.

I wish I had a secret trust in a tax haven somewhere. Of course, to have a secret trust in a tax haven you have to have some money to hide in the first place. For me this is impossible because I have very little money since I pay tax.
Running a small business, I pay GST, PAYE and provisional tax on any profits above and beyond salaries. There is little profit because, once again, I pay tax on it.
There are many people in my position, which may explain why folk are a little upset at the revelations in the Panama Papers, in which New Zealand has 61,000 mentions. It transpires that 11,645 foreign trusts have been registered here. These trusts pay no tax anywhere, it appears, and certainly nothing to New Zealand.
I do note, however, that the business of running the trusts is worth $24 million a year to the country’s lawyers. Sadly for them, that seems to cut little ice with the public, who for some reason are inclined to despise them and their tax-dodging clients.
That New Zealanders cannot directly use the trusts and the Inland Revenue Department loses no revenue because of them is also of little interest to Kiwis. Even the argument that tougher anti-foreign-trust laws would cost the country money in random audits does not seem to meet with the country’s disapproval.
This is because an extremely rarely used word in politics and finance is being uttered. “Moral” is that word. It is not moral for New Zealand as an upstanding world citizen to be aiding foreign fraudsters, crooks and tax evaders to hide their loot. It is immoral to be listed by Mossack Fonseca – the company that lost the Panama Papers – as one of 21 “tax havens” around the world that it used for its shadowy clients.
Fair enough. Couldn’t agree more. Especially as I cannot take advantage of the trusts to hide my wealth, mainly because I don’t have much wealth at all since, as already explained, I keep paying tax.
I have an international tax-lawyer friend who was formerly based in the Cayman Islands and Asia. She described the clients who would use devices such as foreign trusts as not simply oligarchs trying to shield their fortunes from the authorities; they were also trying to hide their money from wives, mistresses, business partners and shareholders. They were very naughty, sly men and women who live mysterious lives.
Most of us who read thrillers and the online pages of the Daily Mail would recognise such people and their shenanigans and dislike them, which is why disapproval of being listed as a tax haven such as the Cayman Islands is widespread. It occurs to me that if we are being lumped in with the Caymans, we should also have more white sand beaches and reggae and better weather.
There is plenty of upside to the Panama Papers. It gives Winston Peters the media spotlight to talk about the ancient Winebox saga and imply that he knows everything about this one, too.
It gives the media something else to talk about now that the flag referendum is over. It gives 99% of us the chance to express our indignation at tax avoiders or evaders. It gives the 1% a chance to exercise their lawyers and accountants in finding new ways to hide their cash.
It will generate still more cash for lawyers and accountants searching for new loopholes to make up for the potential $24 million loss of the foreign trust work.
Which all goes to show the wonderful self-balancing mechanism of capitalism.

IMAGE: About 50,000 people in London protest austerity and tax evasion. Photo/Getty Images

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