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Is Labour planning a tax on revenue?

by Whaleoil on November 30, 2012

When did Labour announce that they want to introduce a tax on revenue as one of their major policies?

When were they thinking of announcing this major new initiative to “help” business…by taxing their revenue as well as their profits?

Facebook’s “tiny” and “barely believable” tax bill this year makes a mockery of New Zealand’s tax loopholes for multinationals, says the Labour Party.

In a statement entitled “Facebook’s tiny tax bill demands action from Dunne”, Labour’s Revenue spokesperson David Clark said the social media site’s New Zealand arm paid a mere $14,497 last year.

Its tax bill in the 2010 financial year was an even smaller $5238, he said.

“For a company that has 2.2 million users in New Zealand and makes billions worldwide, that’s barely believable.”

Facebook appeared to be using the ‘double Irish’ tax technique, Clark said.

“That’s where it uses Irish Facebook, which pays just 12.5 per cent tax, to determine revenue and expenses.”

This ensures the company can put most of its revenue through countries with low-tax systems, he said.

“Peter Dunne calls that ‘legitimate tax avoidance’. I call it a rort.”

Clark said the New Zealand government needed to follow the lead of Australia, which was bringing in laws to clamp down on this type of tax avoidance.

David Clark should have stuck with being a Presbyterian Minister, his grasp on taxation matters is a good as David Parker’s grasp is on arithmetic.

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  • Pissedoffyouth

    That’s still more tax then most of Labours supporters combined.

    Idiots.

  • blazer

    apparantly the U.S misses out on over $600 billion in tax through companies registering in Ireland.Do people really think this is acceptable corporate behaviour?

    • Michael

      Yes. In an open a free market, companies will go where it’s cheapest to do business. End of story.

      Going after them with torches and pitch forks will only do one thing, ensure big business (note, that’s employment for us middle classes) pisses off else where countries are happy to have them.

      • blazer

        its a sham construct though.They just register an office in Ireland.Big business still needs customers.This behaviour is immoral ,unethical and should not be condoned.

        • In Vino Veritas

          Bollocks blazer. You wouldn’t know a sham if it stood up and smacked you in the head with a mallet. For the shareholders it is entirely moral and ethical. It is the fiduciary duty of the Board and Senior management to increase the value of the company for the shareholders, and if this structure does that, and it is done legally, then they have done their job.

          Clark is a moron. The IRD has powers to reverse transactions that they believe are evasion, plus there are transfer pricing rules which Facebook would be well aware of. 2.2m users is a pig and a poke when you look at worldwide numbers. Facebook is an advertising company, and revenues from that can differ markedly from country to country depending on individual users profiles. I see that $361K of their expenses is employee benefits. Perhaps Clark is suggesting that some of those employees are fired so the company can pay more tax?

          • blazer

            always reliance on that key word….’legal’…selfishness,greed and exploitation may be legal,but please do not try and convince anyone they are moral virtues.

          • In Vino Veritas

            So what church do you go to blazer? And to whom do you donate all your earnings to? Which charities do you work for blazer?
            How can a company be selfish? Or greedy? Which employees or shareholders of Facebook have you spoken to, that say the company exploits anything?

          • blazer

            have you never heard the term ”good corporate citizens’ IVV?FB is small potatos atm…the U.S could do with an extra $600 billion.Financial chicanery has lead to the current mess.It is broke and it does need fixing.

          • Alex

            Nice diversionary tactic. Agree with Michael about the tourches and pitchfork mentality when the Left use the dogwhistle of “evil greedy corporation”. No leftist I have ever met can even read a balance sheet or an annual report, and has negligible understanding of accountancy, economic and taxation concepts. These are all “flawed concepts” is the usual justification I hear from leftists too lazy or stupid to even bother to try to engage in meaningful conversation. Like the Holly Walker’s of this world, the modern left is just full of self indulgent slogan lobbers. The sad thing is that there are some very real issues about corporate taxation. Until and unless the Left can make the effort to discuss these issues intelligently, these corporates will continue to milk the taxation system for what it’s worth.

          • In Vino Veritas

            Alex, unlike blazer, you’ve made some sensible points. The issue with corporations though, is that many are mobile. They literally don’t have to produce the goods and services they provide in the US. If you want to tax them out of existence, watch them all shift offshore to countries with lower labour costs and more tax regimes that are more friendly.
            Facebook is an internet company and their infrastructure can be set up anywhere. Some tax revenue is better than none. This is a point that evades blazer.I’m sure he should set up a company and pay more tax than he needs to. In fact, do you make voluntary tax payments blazer? Or are you all talk about greed and selfishness?

          • blazer

            they’ve been shifting offices off shore for decades…and manufacturing facilities too as you well know.Name a sensible point Alex makes,if you can.

          • Alex

            Prove to us that you can read a balance sheet, annual reports, and understand accountacy, economics and taxation concepts. Tell me what transfer pricing is for a start. The left have totally dumbed down this debate. There are some top notch centre-right accountancy and taxation experts (eg Craig Elliffe) who could make corporate taxation so much more robust and still not hobble competitiveness, but because they don’t share the left’s hatred of corporations, left wing parties don’t care to employ their services.

          • blazer

            I do not need to prove anything to you Alex.P.s in case you hadn’t noticed left wing parties are not occupying the Treasury benches!

          • In Vino Veritas

            No, you don’t blazer, but in case you haven’t figured out why no one takes you seriously here, it’s because you expect everyone to believe what you say is true, just because you say it. Seldom do you have any evidence of your stance, you just posture. Just like you did above about greed, selfishness etc. If you talk the talk, you’ve got to be able to walk the walk.
            How many people do you employ?

          • blazer

            are you the apponited spokesperson for ‘everyone’ are you?I posted 600 bill in tax the U.S is losing out on …dont you accept that?

          • In Vino Veritas

            The USA hasn’t lost out on 600m. It never had it, and if the tax laws were changed, those companies that “haven’t” been paying would shift offshore permanently to take themselves out of the US tax jurisdiction. You can’t have lost something you never had. Thats comprehension for you blazer.

          • blazer

            In your world there are never lost opportunities and NZ’s never losing out on markets internationally for whatever reasons put forward ,because they never had them in the first place!Btw I notice you’re good at asking questions,but rarely ever answer any.

          • Alex

            Blazer: That’s right you don’t need to “prove” anything; you can happily make endless assertions; no one will take you seriously until you start providing some substance for assertions; you will continue squirming when someone who has actually thought it through longer than it took you to parrot another dumb slogan and then engaging in diversionary tactics when you find yourself in a cul-de-sac. Yes I think MPs generally are brain dead, whatever their political affiliations; the difference is it isn’t National MPs getting all frothed up about this issue; it’s the Left who are especially afflicted by the narcissistic personality disorder that results in them opining on subjects on which they have no knowledge. Just because you majored in sociology, with a particular focus on gender constructs and queer theory, does not equip you to deal with complex taxation policy.

          • blazer

            In case you hadn’t noticed…most postings here concern the Labour Party…how big Jacindas teeth are,what Mallard said,when Shearer played guitar…in depth topic analysis backed by substantive evidence is the exception rather than the rule.

          • blazer

            so you decide what is ‘intelligent discussion’,do you ?And no leftist you have ever met can read a balance sheet….’Do you expect to be taken seriously?

          • Alex

            Because it is true. I’ve been practising as a tax lawyer for 12 years. I’ve listened to every leftist trot out the same sort of 5th form debating society slogans: evil corporation, greedy, wealthy through crime, exploitation, tax avoiders etc etc. I then ask: so tell me how me how you would reconcile the tensions inherent between accountancy and taxation concepts, the need for precise legislative drafting, the need to ensure NZ’s economic competitiveness will not be detrimentally affected and the reality of jurisdictional choice. I just get a moment’s silence before either the slogans start up again, or they say “that’s for the technicians to work out; I’m interested in “broad principles”". If you don’t have any answers to those questions, then you should STFU or get educated. I’m more than aware that there are some dubious corporate taxation practices occuring. But, as is always the case in life, th hard bit is to find solutions that can effectively remedy the matter and not make things all the worse.

          • Pete George

            No Right Turn has jumped on the Labour bandwagon. Did someone mention slogans?

            “The government should make these companies pay their fair share. And if
            the present government refuses to do so, because they are on the side
            of the tax cheats, we should elect one that will.”

            http://norightturn.blogspot.co.nz/2012/11/taking-on-our-local-tax-cheats.html

            And The Standard has repeated that ignorance:
            http://norightturn.blogspot.co.nz/2012/11/taking-on-our-local-tax-cheats.html

            Did anybody say brain dead?

          • blazer

            Its great that you are so passionate about your vocation.I assume you would be in favour of having simplified,transparent tax regimes and legislation in general.Who benefits from complex tax construct…like say the Magnum transaction,who designs these structures?Answer those questions and my sentiments will become clear.I’m sure you’ve heard of Dr Robin Congreve…he wasn’t too precious to say…’it may not be morally or ethically correct…but its legal’….this pretty much sums up the issues of integrity and fairness that we should expect in a decent society.

          • Alex

            I do.

            I hate bludgers whether they be beneficiaries rorting the system or corporates indulging in immoral practices.

            But I’ve yet to see any poilitician who can actually grapple with these problems properly. The left protect the beneficiary bludgers, while the right protect the corporate bludgers. The left wing politicians, despite all their pre election claims to moral superiority, sell themselves out when the corporates come knocking with attention and flattery — witness the unedifying spectacle of the Labour MPs playing celebrity on the Hobbit red carpet.

            I want a tax system that is designed by experts who live in the real world.

            The left has this sacred cow in the form of “progressive taxation”. It is an utter farce: it is just promptly exploited by those with the resources to do so, with the end result that the middle earners pay more than the upper. That happened under Labour’s idiotic regime with its 39 cents upper personal income rate, plus misaligned trust and corporate rates and LAQC (and, if you were really smart, you could get working for families as the cherry on the top).

            Taxation policy is dreary and dull and requires extreme attention to detail. Something the politicians cannot handle pretty withour exception.

            I can’t stand the left’s “tax the rich” carry on. So also I think the right’s “cut taxes and we will be in nirvana” is disingenious in the extreme.

          • blazer

            I actually agree with everything you say.Unfortunately it is always the ‘middle class’ who carry the can.Squeezed from the bottom and the top.Theres got to be a better way.Hopefully you can contribute to finding it.

          • Sponge

            “so you decide what is ‘intelligent discussion’,do you ?”

            Well clearly you do not.

          • blazer

            post of the year…so profound!

          • In Vino Veritas

            Another reply that doesnt answer questions. The sky is a different colour in your world, isn’t it blazer?

          • blazer

            what colour is the sky in Bill Gates or Warren Buffets world IVV?

          • manuka416

            I don’t think many profitable companies would be morally acceptable to you, blazer, no matter their honest, ethical, and socially responsible practices. You just don’t like people/organisations who create ‘disproportionate’ wealth for themselves or others, that’s your bias.

          • blazer

            you do not need to speculate on what I may or may not think, thanks.

          • In Vino Veritas

            From the content and logic of many of your posts, there is no speculation about what you think blazer, “what you think” would appear to be an oxymoron.

          • blazer

            comprehension ,not your strong point is it IVV…read manukas post and get back into bed.

          • John1234

            At last someone points out that there are IRD rules regarding transfer pricing. To spell it out for the dimbulbs (that means you, Clark): it is not legal for a business to price its outputs artificially low, move them offshore and sell at the market price thereby evading tax. If someone has evidence that FB is evading tax they need to put up or shut up.

            Frankly I’d be surprised if FB was making significant revenue, let alone profit, in NZ. What is it they produce or deliver?

            Interesting about the $361k staff benefits. What are these benefits? Income? Taxable. Perks? Taxable.

          • In Vino Veritas

            John, I don’t know for sure, but I’d say they include salaries, kiwisaver etc. All the normal employee costs.

    • Pokerface

      If we lowered our business tax rate to 12% all that money just might come our way.

      • blazer

        until someone else lowered theirs to …10%

        • Pokerface

          Then just accept it and move on. People will always do what they find rewarding.

          • blazer

            If you accept that ,why even bother suggesting if we lowered our rate to 12% all that money just might come our way.

  • Pete George

    Clark also found that the learning curve in Question Time can be steep, he floundered against Dunne yesterday in an attempted hit: http://inthehouse.co.nz/node/16325

    • Gazzaw

      I agree Pete. Had Twyford not had his arse handed to him by Gerry & then Jacinda exposed as a witless heckler then Clark would have picked up the award yesterday,

  • ratesarerevolting

    At least half of the tax should be payable in the jurisdiction where the business is being undertaken, multinationals utilising such constructs as bogus transfer pricing to minimise tax burden in higher taxing jurisdictions could be stamped down on to the benefit of the long suffering taxpayer.

    Oh and Len brown is fucking cunt !

    • Petal

      Glad you got that off your chest. :)

    • JimboBug

      If it is bogus then the IRD will crack down on it. But you should be taxed where the risk is – if you are doing business with zero risk then the returns should be very low (i.e. commission only); the more risk the higher the expected returns. That is what transfer pricing is – an economic construct that allocates profits (and losses) into the jurisdiction by expected economic return.

      Under your view then a limited risk, commission only jurisdiction would be getting far too much profit allocated to it – so I imagine that the country on the other side of the transaction wouldn’t be happy that they are holding all the risk and little return.

  • MarcWills

    Last night TV3 breathlessly announced that NZ was a tax-haven for internationals to attract the outraged lefties. LOL, wouldn’t that be Ireland being the haven where they pay the low tax rate. And it’s not a problem unique to us, it happens everywhere and will require some sort of world body to come up with a solution. Maybe the World Bank or WTO could do something useful.

    • Petal

      “Maybe the World Bank or WTO could do something useful.”

      ** shudder **

      or the UN… ** cringe **

  • Mr Sackunkrak

    “UNITE’s “tiny” and “barely believable” tax bill this year makes a mockery of New Zealand’s tax loopholes for unions, says the Labour Party.”

    There, fixed it for you.

  • cows4me

    This is why the UN seeks to gain control of the net, all that lovely loot in cyberspace just begging someone to help themselves. Having said that the left are still fucktards. Why do they think individuals and companies go to such lengths to minimise their tax burden. Because the thieving lefty two bobs are always dreaming up ways to steal wealth. They criticize corporations for being greedy, the pricks should invest in a mirror. Perhaps corporations would be more inclined to share the wealth if there wasn’t someone or some political party talking about shafting them up the arse.

    • blazer

      behind every large fortune lies a large crime…

      • stinkeye

        Blazer, Do you have any money in savings? If you do, you are greedy. It should be redistributed accordingly, immediately. i accept Visa too.

  • Adolf Fiinkensein

    Most Presbyterian ministers understand neither arithmetic nor taxation matters.

    The amount of tax being paid in this example might simply indicate that Facebook is a piss ant business.

  • Gazzaw

    I wonder how much tax that arsehole Al Gore pays.

  • Pete George

    It’s not as if someone at IRD and in Government (including the previous Labour one) won’t have thought of this before. Maybe Clark should have consulted a tax expert rather than diving in to what he thought would be popular point scoring.

    3 News reports:

    The party’s revenue spokesman, David Clark, says Revenue Minister Peter
    Dunne is refusing to close loopholes but international tax expert
    Maurits van den Berg says it’s not that simple.

    “The future has arrived, we’re dealing with intellectual property and it’s very mobile,” he said on Friday.

    “These big multinational intellectual property companies quite likely have
    minimal or no actual presence in New Zealand – it makes them quite hard
    to tax”.

    Mr van den Berg says Facebook and Google aren’t guilty of tax evasion, or even tax avoidance.

    The problem is that international tax treaties are built around “bricks and
    mortar” companies which have property and employees in different
    countries, he said on Radio New Zealand.

    “It’s easy to tax a multinational company that has a warehouse in New Zealand
    and employs sales staff but these intellectual property companies are a
    real challenge for governments.”

    Mr van den Berg agrees with Mr Dunne, who says New Zealand has to operate under its international tax agreements.

    “Intellectual property needs to be sorted out at an international level, and it’s going to take years,” Mr van den Berg said.

    http://www.3news.co.nz/Facebook-Google-not-cheating-on-tax—expert/tabid/421/articleID/278695/Default.aspx

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