Labour’s hypocrisy in going after tax dodgers

As we blogged earlier the Labour party is mounting a campaign to go after tax dodgers.

Instead of shrugging, John Key should immediately be doing three things:

  • Stop New Zealand being used as a tax haven;
  • Stop multinationals dodging the tax they owe here;
  • Urgently launch a full Parliamentary inquiry into tax dodging in New Zealand.

John Key’s doing his best to protect the mega-rich.
But we can force him to take action.


Together, let’s make John Key do more than shrug,

Labour Campaigns Team

Andrew Little seems to know a great deal about tax dodging. He should of course because his Chief of Staff presumably is advising him of all the ways he managed to dodge tax.

Inland Revenue is chasing unionist Matt McCarten’s Unite Support Services for $150,750 in unpaid taxes after the department forced the company into liquidation last month.

McCarten’s vehicle, which supplied administrative support services to the youth-orientated union Unite, was put into liquidation by a High Court order last month after the IRD pursued it for “failure to provide for taxation,” according to the first liquidator’s report.

The Official Assignee rated the prospect of a dividend as “unlikely,” and is looking into the company’s possible interest in an Onehunga building lease, the report said.

The liquidator will contact McCarten to verify Unite Support Services’ interest in the building, which may have outstanding arrears owed on the lease.

IRD is seeking almost $4000 costs, $97,000 in a preferential claim and a further $49,800 as an unsecured creditor with proof of debt.

The Unite union assigned an interest in a lease and the provision of educational activities to McCarten’s company, according to its 2009 financial statements, the latest lodged with the Companies Office. The union has the right to take action against McCarten’s company if there’s a default on the lease agreement.

The union ran afoul of the IRD after failing to pay tax on revenue accrued between October 2007 and March 2009. After racking up $134,000 in unpaid tax, it agreed to repay that at a rate of $8000 a month.

The company reported a net deficit of $33,700 in the 2009 year and made a loss of $15,500 the year before.

Unite union recognised Unite Support Services as a related party, but didn’t pay any charges for its services in the 2009 year.

When it comes to tax dodging Labour can rely upon the expert advice of Matt McCarten.


– Fairfax, Labour party


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  • Seriously?

    To me, tax dodging is basically no different to a beneficiary ripping of the system – it is theft from the taxpayer, me, you, all of us. Perhaps the differences are that tax dodging involves more money, and is harder to detect and prove.

    National are trying to tackle it, as well they should.

    What Labour are doing wrong is the mistake they always make: They say National are doing nothing about a problem, and we know that is a lie, and they point to completely stupid examples and unattainable goals. There is nothing wrong with being a bit more realistic: like saying they think National are doing okay but that they would do better and we deserve better.

    • Totara

      To me, theft is an act in which property belonging to another is taken without that person’s consent. Usually accompanied by (a threat of) violence.

      That sounds a lot like taxation, which I don’t remember ever consenting to.

      Kerry Packer summed it up well.

      • Cadae

        Nice clip. Packer skewered them nice and proper.

        Socialists know that taxation is theft but they turn a blind eye to it or rationalise it away, just like any robber does. Thus they make nonsense claims like the above “tax dodging is basically no different to a beneficiary ripping of the system”, despite the clear fact that the taxpayer is trying to stop what he EARNED from being taken away, while the beneficiary is attempting to STEAL more UNEARNED money.

      • Seriously?

        The “tax is theft” argument is a bit like communism, it died a natural death in the 70s.

        You consent to being taxed every time you drive on a road. Every time you flush the toilet. When your kids go to school. You don’t get to decide exactly how your tax dollars are spent – we live in a democracy. If you don’t think you ought to pay tax at all then the least you should do is refuse to accept the outcomes of that taxation that you like.

  • Tiger

    Instead of using the term “Tax Dodging” should the term “Structuring ones’ income, investment and cost vehicles within the bounds of current legislation”? The rest is up to the accountants, directors and IRD to sort out. Surely this is not illegal, therefore legal. Are Labour therefore banging their envy drum to whip up support from the “poorly done by” masses? In which case that lot are already voting (or not bothering) for Labour anyway. Has the internal Labour memo regarding finding the “missing million” been misinterpreted by the cadres as finding the missing million dollars?

    • Jonathon Stone

      The key difference is between tax avoidance (or minimisation) and tax evasion is commercial intent. An entity can structure it’s affairs in any way they like (within the bounds of legislation) provided that it is done for commercial reasons. If reduced tax is a side-effect of that structure, then it is tax avoidance, completely legitimate and of no concern to the IRD. However, when the affairs of the entity are structured for the primary intent of reducing tax, without commercial reasons, it is tax evasion and illegal.
      I would hazard a guess that most of the “evil corporates” have received sound tax advice from their accountants and are structured in a commercially justifiable way, that just happens to also reduce their tax.

  • Tony Norriss

    I understand it is a criminal offence not to pay PAYE. Why hasn’t someone (e.g. McCarten) been arrested over this?

  • localnews

    I find it frustrating that in discussing multinationals contribution to NZ’s tax take, no allowance is made for the paye or gst contributed. Everybody who has bought an iPhone has contributed gst to the ird. To make a fuss about company tax paid is very short sighted. We need to concentrate on encouraging big companies to invest and employ in our country, any terminal tax we collect is a small bonus on top

    • Second time around

      They do not necessarily operate at a profit here anyway, Air Asia X flying to Christchurch in 2011 for example.

  • Nesher

    The Labour yelled about Keytruda until they were caught on being bribed by Merck.
    For how long they will yell about the “NZ Tax Haven”? Until they are caught on funding their election campaigns from foreign owned or charitable trusts? Or maybe until some embarrassing connections of the Labour/Unions activists are revealed (like this one for Clinton Or maybe until they are caught on hiding their assets overseas? I am waiting to enjoy the moment.

    • Isherman

      Well they have a handy expert in secret trusts for leaders to keep donations quiet over at one of the other blogs it’s all possible. It’s not like it would be the first time or anything.

  • zotaccore

    McccCarten has ALWAYS been a dodgy fella. It’s no surprise he is sitting in the headshop of the New World Socialist Order of the Labour movement. What a goat – he’s a failed politician, failed political strategist, failed communicator. Yet, continually, Labour supporters just keep on banging away at the same old stuff.

  • Second time around

    Labour has listed two very different areas, multinational businesses that do pay tax when their operations in NZ yield a profit, and non resident trusts, but only those non resident trusts where the true ownership has been concealed. Because the trusts don’t normally owe tax in NZ they are of even less interest than, for example, a Chase Manhattan US bank account not entered on the parliamentary assets register.

  • Orca

    Isn’t it funny how the lefties love to state how evil it is for money to be so important, and that “social issues” are far more important, but then as soon as “more tax money” is suggested, the dollar signs just gleam in their eyes.

  • McCarten like a good little socialist has defaulted on his obligations.

    This isn’t about restructuring tax or working within the law, this is simply a die hard lefty failing to practice what they preach…again.