It was hardly a dream debut for Labour’s long-awaited, much-argued-over tax package for Aotearoa New Zealand.

What was meant to be a carefully choreographed reveal of a capital gains tax (CGT) later this week instead arrived early — leaked to RNZ over the long weekend and hastily confirmed by Chris Hipkins this morning.

In his media conference at Parliament, Labour’s leader downplayed the premature release, saying the details had been circulated widely and could have come from anywhere.

• READ MORE: What you need to know: Seven questions about a capital gains tax

He delivered a stern warning to any leaker, but also said he was not interested in pursuing any sort of investigation.

That is sensible. History shows such hunts usually end badly. Just ask National about Jami-Lee Ross.

Still, the leak will be of some concern to Hipkins.

The party’s internal debate over whether to pursue a wealth tax or CGT has been long and bruising, with strong feelings on both sides.

RNZ understands the caucus vote for a CGT plan was near unanimous – but not quite. And the party’s ruling council and policy council were more divided again.

Hipkins needs those proponents of a wealth tax to now fall in behind the selected proposal.

Unity will be crucial if Labour is to sell yet another version of a policy it has repeatedly failed to convince voters to support.

Containing the risk
Labour knows the political peril of talking tax. It’s been burned before — in 2011, 2014, and 2017.

This time, the party has chosen the smallest possible target: a cautious CGT applying only to property sales, excluding the family home and farms.

The rate would be set at 28 percent, in line with company tax, and would apply to profits made after 1 July 2027.

National disputes the description of “narrow” but compared to the other options on offer, it meets the definition. This does not cover shares, KiwiSaver, inheritances, or personal assets, like classic cars or artwork.

In many respects, it’s little more than an expanded bright-line test — closely resembling the minority view of the 2019 Tax Working Group.

The strategy is clear: keep it simple and sellable.

Labour believes a modest CGT will be more palatable to the public than the more novel and ambitious wealth tax. Capital gains taxes are familiar overseas and no longer as frightening a concept as they once were.

Definition complications
But even the narrowest design can have complications. For example, look to the definition of “family home”.

Labour is using the definition used currently by the brightline test which requires a person to be currently living in that house “most of the time”.

It means that a person who owns just one house, but lives in a rental property elsewhere, would still be taxed if they sold that property.

Keeping the scope tight also limits revenue.

Labour’s own policy paper concedes the returns will be “small relative to GDP and total tax revenue” – roughly $700 million a year.

And almost all of that will go straight into Labour’s accompanying health policy.

The sweetener: A ‘Medicard’ for GP visits
In a bid to soften any political blow, Labour has paired the tax with a tangible benefit — a “Medicard” giving every New Zealander three free GP visits a year.

By tying its CGT to the health system, Labour hopes to frame it not so much as punishment for property owners, but more as a pragmatic way to fund something people actually want.

It’s no mistake that the policy touches the two issues named most important by voters in polling: the cost-of-living and healthcare.

Labour has also intentionally made the entitlement universal to ensure the widest possible appeal — even if critics argue the money would be better targeted to those most in need.

Speaking of the critics, government MPs were practically salivating today, having eagerly awaited this announcement as a potential turning point in the polls.

Labour’s rise in popularity has come despite having little in the way of a policy platform and the coalition hopes the tide will turn as voters look more sceptically at the alternative.

Finance Minister Nicola Willis branded the proposal a “terrible idea”, warning it would hit small businesses that own property.

‘Tall-poppy politics’
Act’s David Seymour called it divisive “tall-poppy politics”, while New Zealand First declared the rollout “a trainwreck”.

NZ First’s post on social media included a noteworthy kicker, describing the CGT as merely “a foot in the door” for the Greens and Te Pāti Māori.

Hipkins today tried to shut down that attack, claiming that Labour’s tax plan would be the next government’s tax plan.

But he received no assistance from his purported partners, with the Greens insisting they would not be relinquishing their advocacy for a wealth tax.

Expect more heat on that front as the election approaches.

RNZ’s latest Reid Research poll shows the task ahead for Labour: 43 percent in support of a CGT, 36 percent opposed, and 22 percent undecided.

That’s not exactly a decisive mandate – but it’s not dismal either.

After months of indecision, Labour is finally in the policy game.

This may not be how it had hoped to roll out its flagship policy, but the real test will be how well it can sell it over the coming months.

This article is republished under a community partnership agreement with RNZ.

Shops have been set on fire or looted in parts of Papua New Guinea’s capital Port Moresby as unrest broke out during a police and military strike.

The protest over unexplained pay deductions to salaries of police, military, and correctional services has triggered sporadic looting in Port Moresby.

About 200 Papua New Guinea police and military personnel abandoned work for a day to protest.

• READ MORE: Papua New Guinea’s security personnel storm Parliament
• Other PNG security reports

At 10am (local time) yesterday, police and military personnel gathered at Port Moresby’s Unagi Oval in protest over what they say are hefty “tax” deductions in the most recent pay period.

According to service members, the deductions over the last fortnight range between US$26 and US$80 (K100 and K300).

The police union demanded answers from the government at the gathering and by 11am, a large group proceeded to Parliament where they demanded answers from the Prime minister and members of the cabinet.

The deductions come as Papua New Guineans experienced a noticeable rise in the cost of goods and services in the last three months.

Working to resolve issue
The Internal Revenue Commissioner released a statement saying that the government was working as quickly as possible to resolve the issue.

Prime Minister James Marape released a statement calling for calm while stating that the deductions were caused by a glitch in the government payroll system.

An earlier RNZ Pacific report said that Assistant Police Commissioner Anthony Wagambie addressed the protesters at Unagi Oval.

“Frustrations boiled over so they got into their vehicles and stormed Parliament . . . they opened the gates and went into Parliament,” reported Scott Waide.

“There was no real resistance to stop them . . . it was a rowdy crowd, the defence minister had attempted to speak to them outside of Parliament before they walked in.”

Police Association president Lowa Tambua demanded an answer about why there had been deductions.

‘Immediate answer’ demand
“We want an immediate answer from the Minister of Police and the Prime Minister,” Tambua said.

“We we’re all caught by surprise . . . come and address my members as to why this has happened.

“Don’t hide between the Parliament House . . . come over here and address our police men and women.”

IRC commissioner-general Sam Koim said “there has been no tax increase” to their salaries.

In a short statement, Koim said: “There was a technical glitch on the Alesco payroll configurations and hence the deductions.”

This article is republished under a community partnership agreement with RNZ.

There is a sea change happening in the wider electorate in Aotearoa New Zealand which is counter intuitive to what the polls are saying.

On the one hand the public overwhelmingly support much fairer taxation but the polls tell us we will have an Act/National government in a couple of weeks which will increase unfairness in tax.

The simple answer to this contradiction is that people vote against governments rather than for them and Labour are being punished for failure — a party in policy paralysis — unable to get out of its own way and get anything meaningful done.

• READ MORE: Proving the wealthiest New Zealanders pay low tax rates is a good start – now comes the hard part
• Other NZ election 2023 reports

Spelling this out is a recent poll conducted by Essential Research for the lobby group Better Taxes for a Better Future which shows the big majority of voters want a capital gains tax, a wealth tax, a windfall profits tax and want the wealthy to pay at least the same tax rates as the rest of us. (A survey conducted by IRD earlier this year found the uber rich pay less than half the tax rates the rest of us pay)

Here are the figures:

Wealth tax
A TVNZ poll released last week shows overwhelming support for a wealth tax in line with Green Party policy.

The poll asked eligible voters if they would support or oppose a wealth tax on the assets of New Zealanders with more than $2 million in assets if having the wealth tax meant everyone got free dental care.

A majority — 63 percent — said they would be in support of it, while 28 percent were opposed. The rest did not know or refused to say.

The polls show the ground has shifted dramatically in recent times and has opened the way for Labour’s traditional values (if they have any life left in them) to flourish. The electorate is wanting fairer taxes and have the free-loading rich pay much more.

But Labour under its current and former leaders has been looking the other way. It is out of touch and faces its heaviest electoral defeat in my lifetime.

National and ACT are doing well not because voters want them but because voters are voting against Labour.

The same thing happened in the 1990 election. After six years of brutal Labour policies under David Lange and Roger Douglas the electorate had had a gutsful. They wanted to stop featherbedding the rich at the expense of the rest of us.

National policies even worse
Labour was thrown out and National came in with policies that were even worse than those proposed by Labour.

The same thing will happen this election.

There is a pervasive belief among self-interested politicians that when they are interviewed for opinion polls people will say they are prepared to pay higher taxes but when they get into the ballot box they vote against tax increases.

But this argument can only apply when the individual voter faces paying more tax. In these recent polls the call is for the undertaxed rich to pay a much fairer share. These tax changes the electorate wants will not impact on the 99 percent of voters who go to the polls.

Even National and Act voters want these taxes — but the Labour leadership remain lost in the neoliberal wilderness. They haven’t got the message.

Labour’s failure means we will have to face three years of awful National/Act policies which will deepen the problems we face.

I haven’t kept count but I have personally heard from dozens of Labour members and voters who have told me they have left the party this year and won’t be voting Labour this year — disgust is the dominant theme.

Only hope is reshaped party
After this election Labour’s only hope is to reshape the party around the changed public attitudes to tax and find its roots once more. That is easier said than done for many reasons.

Labour’s activist base is irredeemably middle class and it only has tenuous links with organised workers (less than 10 percent of private sector workers are in unions) who are a small part of the voting public.

Labour leader Chris Hipkins has shown no sign he is capable of leading the rejuvenation policy, thrust and direction the party needs. He is still in the politics of the late 20th century.

All the indications are that the job of Labour renaissance is beyond him.

Hopefully there will be enough good people left in Labour to do what’s needed.

Republished with permission from The Daily Blog.

Aotearoa New Zealand’s opposition – and poll leader — National Party’s three biggest donors have a combined net worth of $15 billion.

The bottom 50 percent of NZ has $23 billion.

The top 5 percent of New Zealanders own roughly 50 percent of New Zealand’s wealth, while the bottom 50 percent of New Zealanders own a miserable 5 percent.

• READ MORE: Other NZ election 2023 reports

IRD proved NZ capitalism is rigged for the rich and business columnist Bernard Hickey calculates that if we had had a basic capital gains tax in place over the last decade, we would have earned $200 billion in tax revenue.

$200 billion would have ensured our public infrastructure wouldn’t be in such an underfunded ruin right now.

There are 14 billionaires in NZ plus 3118 ultra-high net worth individuals with more than $50 million each. Why not start start with them, then move onto the banks, then the property speculators, the climate change polluters and big industry to pay their fair share before making workers pay more tax.

Culture War fights make all the noise, but poor people aren’t sitting around the kitchen table cancelling people for misusing pronouns, they are trying to work out how to pay the bills.

‘Bread and butter’ pressures
“Bread and butter” cost of living pressures are what the New Zealand electorate wants answers to, and that’s where the Left need to step up and push universal policy that lifts that cost from the people.

The Commerce Commission is clear that the supermarket duopoly should be broken up and the state should step in and provide that competition.

We need year long maternity leave.

We need a nationalised Early Education sector that provides free childcare for children under 5.

We need free public transport.

We need free breakfast and lunches in schools.

We need free dental care.

We need 50,000 new state houses.

We need more hospitals, more schools and a teacher’s aid in every class room.

We need climate change adaptation and a resilient rebuilt infrastructure.

Funded by taxing the rich
We need all these things and we need to fund them by taxing the rich who the IRD clearly showed were rigging the system.

That requires political courage but there is none.

No one is willing to fight for tomorrow, they merely want to pacify the present!

Just promise me one thing.

Don’t. You. Dare. Vote. Early. In. 2023!

I can not urge this enough from you all comrades.

Don’t vote early in the 2023 election.

Secrecy of the ballot box
I’m not going to tell you who to vote for because this is a liberal progressive democracy and your right to chose who you want in the secrecy of that ballot box is a sacred privilege and is your right as a citizen.

But what I will beg of you, is to not vote early in 2023.

Comrades, on our horizon is inflation in double figures, geopolitical shockwave after geopolitical shockwave and a global economic depression exacerbated by catastrophic climate change.

As a nation we will face some of the toughest choices and decision making outside of war time and that means you must press those bloody MPs to respond to real policy solutions and make them promise to change things and you can’t do that if you hand your vote over before the election.

Keep demanding concessions and promises for your vote right up until midnight before election day AND THEN cast your vote!

We only get 1 chance every 3 years to hold these politicians’ feet to the fire and they only care before the election, so force real concessions out of them before you elect them.

This election is going to be too important to just let politicians waltz into Parliament without being blistered by our scrutiny.

Demand real concessions from them and THEN vote on Election Day, October 14.

If the Left votes — the Left wins!

Republished with permission from The Daily Blog.

Labour leader Chris Hipkins believes there are better ways to bring down the cost of housing, electricity and groceries than new taxes.

But in at least three of those areas – electricity, banking and groceries – a third-term Labour-led government would not rule out taxes on excessive profits, should other measures fail to rein them in.

“Tax is not the only way you can tackle inequality,” Hipkins — whose grasp on the prime ministership is looking shakier with every poll — told Mata this week.

• LISTEN TO MATA: Chris Hipkins on taxation – Episode 18
• Other NZ election 2023 reports

“The policies that we are introducing and implementing as a government are actually I think making a meaningful difference on inequality.”

An IRD document released in April, the High-Wealth Individuals Research Project Report, found the wealthiest New Zealanders pay an effective tax rate about half that the rest of us do, largely through untaxed capital gains.

Despite this, support for the idea from his former revenue minister and it being a key plank of likely coalition partner the Greens’ platform, Hipkins has ruled out implementing any kind of wealth tax, should Labour lead the next government.

He has also ruled out a comprehensive capital gains tax, despite the recommendation from the Tax Working Group to target capital gains to ease the burden placed on wage and salary earners.

Housing
Currently, the bright-line test means residential property — aside from the family home in most instances, and a few other situations — attracts a capital gains tax if it is sold sooner than 10 years after purchase. National wants to lower this to two years.

Hipkins said other suggestions — such as a land tax, as proposed by The Opportunities Party — were not on the table.

“It’s not something we’re looking at at the moment,” Hipkins told Mata host Mihingarangi Forbes.

“The main form of land tax we have at the moment is local government rates, which are levied on a combination of land and asset value — whatever sits on top of that land — so we already have that at the moment. We’re not proposing to expand that further.

“The one area where I have seen proposals is around transport infrastructure — that’s what’s called ‘value capture’, which is effectively a form of land tax or land levy, based on where you’re building new roads and who’s capturing the value from those.

“We have left that open. The National Party are promising they’re effectively going to do it — we’ve left it open as an option, but we’re not proposing to go further than that.”

Asked why the average Kiwi had to pay about 20 percent of their income in tax (on average) while landowners making money that way did not, Hipkins said the gains should be “realised” before they were taxed.

“Levying people based on assets they own that they may never realise the gain from, it wouldn’t be an equitable way of taxing people.”

He gave the example of a family-owned farm which might be “worth millions”, but the present owners would not necessarily have the income to pay a land tax.

Ultimately, the key to making homes affordable for both buyers and renters was increasing supply, Hipkins said.

“The fundamental challenge around housing in New Zealand is we haven’t built enough houses over a long period of time — we’re talking decades — to keep up with population growth that we have. No matter how you fund it, it’s never going to be possible to turn that around overnight because building the volume of houses that we need to build takes time.

“We’ve really ramped up our house building programme and we’re seeing real results coming out of that now. My message is really, we can’t afford to turn back. We can’t afford to stop . . . we’ve got to keep it going.”

Labour originally promised 100,000 homes by 2028 under its KiwiBuild plan. Hipkins said so far it had only managed about 3000.

“It’s not hit the targets we had originally envisaged for KiwiBuild, but we’ve found other ways of actually delivering on the overall approach. For example, scaling up our state house build programme . . . actually in terms of targeting the demographic who are homeless and the most vulnerable, that’s actually going to reach that demographic faster than KiwiBuild would be able to reach them.”

He said about 13,000 new state homes had been built since 2017 with “more coming”, and the private sector had also become “very active” too. Stats NZ figures showed consents peaked at over 50,000 for the first time in 2022, and have  slightly slipped since then.

Electricity and banking
In the last financial year, the big four energy companies — Contact, Genesis, Meridian and Mercury — reported a combined $2.7 billion in profits.

The big banks have also reported near-record profits of late, as interest rates rise.

Asked if they could be subject to an excess profits tax, Hipkins said his preference would be to use regulatory measures and increased competition to keep prices in check.

“[The electricity] market is in a period of significant transition as we move away from burning fossil fuels to a much greater reliance on renewable energy, which will mean prices ultimately don’t grow as fast as they would if we were still going to be relying on fossil fuels.

“Some of that money will be money that’s reinvested, for example, to actually make sure we actually have the renewable electricity generation assets that we need to be able to meet that demand.”

That lines up closely with what the power retailers themselves have said, Contact Energy chief executive Mike Fuge saying there was an “incredible amount of investment that’s going in to the industry at the moment to decarbonise”.

Hipkins left the possibility of taxing excess profits in both industries on the table, however.

“I would never rule out … that if companies continue to make excessive profits, the government might do more in that area. But my first port of call would be more in the regulatory space to make sure they aren’t making those kind of big, unjustifiable profits in the first place.”

He placed the blame for rising electricity prices on the market reforms of the late 1990s, despite Labour being in power — either alone or in coalition — for about 15 of the past 23 years.

“The challenge is you can’t unscramble an egg — once that’s been done, it’s been done . . .   I want to see us focused on creating a renewable energy electricity market, which includes the ability for people to generate their own electricity — more solar and more initiatives like that . . .  that is actually going to be cheaper.”

As for the banks, which do not have any need to invest in overhauling the entire way they do business, Hipkins said there had been some “pretty robust conversations”.

“It is not an area where I’m not ruling out doing more things in the future, but my focus really is on making sure that that market is competitive, rather than necessarily introducing new forms of taxation.”

He blamed some of the profits the banks had made on the pandemic, and that did not mean “those profits are going to continue” in the post-pandemic environment.

Groceries
Food prices have been rising faster than inflation generally, between 9 and 12 percent annually over the past couple of years. Labour has promised to combat this by cutting GST off fruit and veges, a policy widely panned by economists and tax experts.

Even if retailers did pass the savings on to customers, fruit and veges would likely still be more expensive on average than they were a year ago.

The Commerce Commission in 2022 estimated the supermarkets were making about $430 million a year in excess profits.

Hipkins said the government had been doing more to help rein in grocery prices, such as appointing a grocery commissioner and breaking up the supermarket duopoly on wholesale supply chains.

“The work that we’re doing to change wholesale distribution supply chains – at the moment they’re locked up by two big companies – so that more competitors have access to that, that will actually make a difference in making the market more competitive, so that those kind of excess profits that we’ve seen cannot be generated in the first place.

“It won’t happen overnight, but I think we will see progress over the next year or two.”

Produced for RNZ and TVNZ by the Aotearoa Media Collective. Made with the support of Te Māngo Pāho. Public Interest Journalism funded through NZ On Air. This article is republished under a community partnership agreement with RNZ.

Cabinet Minister David Parker recently told The Spinoff he’s reading The Triumph of Injustice – how the wealthy avoid paying tax and how to fix it, by Berkeley economists Gabriel Zucman and Emmanuel Saez.

The book complains that leftwing politicians throughout the world have forsaken their historic duty to innovate on taxation and force wealthy vested interests to pay their fair share. The authors say governments of both left and right have capitulated unnecessarily to the interests of the wealthy in setting policies on tax and spending.

Parker shares this ethos and it’s undoubtedly a big part of his decision to revolt against his leader.

• READ MORE: Other Bryce Edwards reports

First, Parker ignored constitutional conventions and spoke out against the Prime Minister’s decision last month to rule out implementing any capital gains or wealth taxes. And last week he resigned as Minister of Revenue, saying it was “untenable” for him to continue in the role given Hipkins’ stance on tax.

Clearly, Parker is highly aggrieved at Hipkins’ decision to rule out a substantially more progressive taxation regime, especially when there is such strong public openness to it.

In May, a Newshub survey showed 53 per cent of voters wanted a wealth tax implemented. And last week, a 1News poll showed 52 per cent supported a capital gains tax on rental property.

Parker has become the progressive voice of Labour
Parker has thrown a real spanner in the works for Chris Hipkins at a crucial time in Labour’s re-election campaign. Such dissent from a Cabinet Minister is highly unusual.

It’s also refreshing that it’s over a matter of principle and policy, rather than personality, performance, or ambition.

There will be some Labour MPs and supporters annoyed with Parker for adding to Labour’s woes, especially when the government is already looking chaotic. He’s essentially declared a “vote of no confidence” in his own party’s tax policy.

This is not the staunch loyalty and unity that Labour has come to expect over the last decade, whereby policy differences are suppressed or kept in-house.

But even though Parker was being criticised last week by commentators for throwing a “tantrum” in resigning his Revenue portfolio, this charge won’t really stick, as he just doesn’t have that reputation.

His protest is one of principle, not wounded pride or vanity, and it’s one that will be shared within the wider party.

In taking such a strong stance on progressive taxation, and so openly opposing Hipkins as being too cautious and conservative, Parker has become something of a beacon for those in Labour and the wider political left who are discontented over this government’s failure to deliver on traditional Labour concerns.

Is there a future for Parker in Labour?
Parker’s outspokenness may be a sign that he’s had enough, and is looking to leave politics before long. Being on the party list means he can opt out of Parliament at any time.

After the election, he may decide it’s time to retire, especially if Labour loses power. In fact, Parker has long been rumoured to be considering his retirement from politics, so it might just be that the time has finally come.

A private decision to leave might explain why Parker has decided to put up and not just shut up, and publicly distance himself from Labour’s decisions on tax for the sake of his reputation.

It’s also possible that Parker has chosen to try to pressure Labour towards a more progressive position on taxation, and this is the start of a bigger campaign. If so, he would be playing the long game.

Parker is now established as the most progressive voice in Labour, which could see him move up the caucus ladder when Hipkins eventually moves on — especially if Labour is defeated at the election in October.

And Hipkins might have inadvertently invited opponents to want to replace him with a more progressive politician when he made his “captain’s call” to rule out any sort of real tax reform for as long as he holds the role.

Given that they had an absolute majority in the last three years they can’t blame anyone else. And should they lose the election, the analysis from within Labour will certainly be that they were too centrist and didn’t do enough.

Parker would be a strong contender for the leadership sometime in the next term of Parliament. That is if he wants it and hasn’t simply had enough. There are signs that he would be keen — he ran for the top job in 2014, with Nanaia Mahuta as a running mate, but lost out to David Cunliffe.

Last week he reiterated that he was up for a fight, explaining his decision to stand down as Minister for Revenue, saying, “I’m an agent for change — for progressive change.

“I’ve been that way all of my political life and I’ve still got lots of energy as shown by the scraps that I’ve got into in the last couple of weeks on transport.”

Of course, when the time comes to replace Hipkins, the party will face the temptation to look for a younger and “fresher” leader. Until very recently, the likes of Kiri Allan and Michael Wood were seen as the future, but those options have disappeared.

And the party might do well looking to someone with more proven experience.

Parker could fit that bill — he’s been in Parliament for 21 years and served in the Helen Clark administration as Attorney-General and Minister of Transport. He is seen as an incredibly solid, reliable politician, with a very deep-thinking policy mind.

By contrast, the rest of the cabinet often seems anti-intellectual and bereft of any ideas or deep thinking, which means that they are too often captured by whatever new agendas the government departments have pushed on them.

Arguably that’s why the blunt approaches of centralisation and co-governance have so easily become the dominant parts of Labour’s two terms in power.

Labour needs Parker’s progressive intellectual politics
Regardless of whether Parker ever gets near the leadership again, it’s clear he has much to offer in pushing the party in a more progressive direction. Certainly, Labour could benefit from a proper policy reset and revival — which Hipkins hasn’t been able to achieve.

The new leader managed to throw lots of old policy on the bonfire, and he successfully re-branded Labour as being more about sausages and “bread and butter” issues, but Hipkins hasn’t yet been able to reinject any substantial positive new policies or ethos.

Parker’s dissent this week indicates that frustration from progressives in Labour is growing, and there are some very significant policy differences going on in the ruling party of government.

For the health of the party, and for the good of the wider political left, hopefully Parker will continue to be a maverick, positioning himself as an advocate of boldness and progressive change.

Parker recently selected Thomas Piketty’s Capital in the Twenty-First Century as the book “Everyone should read”. He explained that “As a politician who believes in social mobility and egalitarian outcomes, this book inspired me to seek the revenue portfolio”.

That Parker has now had to give away that portfolio says something unfortunate about the party and government he is part of. And if the last week also signals that Parker is on his way out of politics, that too would be a shame.

After all, in a time when parliamentary politics is about scandal, and the government has lost so many ministers over issues of personal behaviour, it would be sad to lose a minister who is passionate about delivering policies to fix the problems of wealthy vested interests and inequality.

Dr Bryce Edwards is a political scientist and an independent analyst with The Democracy Project. He writes a regular column titled Political Roundup in Evening Report.

One of New Zealand’s wealthiest people says he supports a capital gains tax, as new research lays the groundwork for a fresh tax debate.

A two-year investigation by Inland Revenue has found New Zealand’s ultra-rich pay tax at less than half the rate of the average person.

The findings come as no surprise to many, including one of the 311 richlisters who responded to the government survey.

• READ MORE: Other reports on NZ economy

The man, who did not want to be named, made his fortune on untaxed capital gains but supports taxing those gains — saying it was only fair to bring New Zealand into line with other countries.

However, he said a more broad-brush approach — like a capital gains tax on all properties beyond the family home — would do more for the government’s revenue.

“You could take all the money off [rich listers] and it would fund the government for a day. The government spends about $100 billion a year and taxes about $100 billion a year, so anything that happens needs to materially contribute to the revenue side of things. Otherwise, it’s just the politics of envy.”

In a speech on Tuesday, Revenue Minister David Parker described the report’s findings as “ground-breaking” but would not venture any suggestions as to how the government might respond.

Answers – for the future
“What, if anything, do we do about that [disparity] here in New Zealand? We’re not providing the answers today. That is for the future.”

Other political parties have split down ideological lines with National and ACT on one side and the Greens and Te Paati Māori on the other.

National leader Christopher Luxon on Tuesday came to the defence of New Zealand’s uber-wealthy, arguing they already pay their fair share of tax.

“It’s not the wealthy that are the problem here… this government has pumped up asset values and the wealthy have done well,” Luxon told reporters.

“The top 2 percent of New Zealanders are paying about 26 percent of all our income taxes and I think that is entirely fair.”

Luxon said National would deliver “middle working-class New Zealanders” a tax cut, while Labour was “softening us up for a tax grab”.

ACT leader David Seymour criticised the study as a “politically-driven fishing expedition to find people with money and take it from them”.

‘Fishing expedition’
“[Parker’s] fishing expedition wasn’t about gathering information,” he said. “It was about creating a narrative that he can ride to more taxes on Kiwis.”

On the other side of the argument, Green revenue spokesperson Chlöe Swarbrick put up an empassioned argument for a comprehensive capital gains tax or wealth tax.

“The super rich in Aotearoa are much much richer than we thought them to be,” Swarbrick said.

“To allow millionaires to continue to not pay their fair share after this explosive evidence is a political choice. Poverty is a political choice.”

Te Paati Māori co-leader Rawiri Waititi told RNZ there was no excuse for inaction.

“It’s just absolutely shocking, cruel and very unkind. Until they do something about it Labour, National and ACT will continue to be the bullies at school picking on the poor people.”

The government was yet to announce a new tax policy but is promising to bring one to this year’s election campaign and Parker has signalled it will be informed by this latest research.

This article is republished under a community partnership agreement with RNZ.

The gamble that the previous FijiFirst government took in 2016 — in reducing the value added tax (VAT) rate from 15 percent to 9 percent — was basically done to please the people, says Fiscal Review Committee chair Richard Naidu.

He said this gamble failed miserably because government expenditure continued to increase while the income it received was reduced.

“I think that for a long time, the government has been underfunded,” Naidu said.

• READ MORE: Other Fiji economy reports

“We forget that VAT used to be at 15 percent and personal income tax used to kick in at $16,000 [NZ$12,000] and now kicked in at $30,000 [NZ$22,000].

“So, what happened was that for the last 10 or so years, we have reduced the amount of tax we take, basically to please people.

“We’ve cut the VAT and we’ve cut personal income tax, but we’ve kept spending.

“We took a gamble that somehow this would create economic growth and the gamble failed.”

Debt level a threat
He said the possibility of adopting some of the old tax rates was unavoidable as the level of debt the country had was a threat in itself.

“The advice that we are getting is that we have to get our debt to GDP (gross domestic product) ratio down and over a 10-year period.

“What we are saying is that debt does not drive what we do.

“We have to have a national vision; we have to execute that vision, but we have to keep in mind the debt, because the debt is one of the threats that we are facing.

“Now really all we are saying is that in respect of some taxes — not all — we might have to go back to the old rates.

“So, when people say this is terrible, this should never happen and we’re being cruel and imposing pain, people need to remember that this is actually what the tax rates used to be.”

Naidu stressed that the abnormal situation that people were referring to was what the economy endured in the last 10 years when it could not raise enough money to fund critical infrastructure investments.

Playing catchup
He said this was why the current government had to play catchup and raise funds to meet the needs of the people.

“That means we have delayed investments in critical infrastructure.

“Why is it that we have thousands of people in the Suva-Nausori corridor who do not have water for 10-12 hours a day.

“It is because we did not invest and now, we have to play catchup, we have to invest harder and faster, and we don’t have the money and somehow, we have to raise that money quickly.

“So, we do not have a lot of choices in terms of the investments that we have to make.”

Meri Radinibaravi is a Fiji Times reporter. Republished with permission.

Any attempt to review or change Fiji’s existing taxation system will be done with proper consideration of all reports and recommendations on the issue, says Fiji’s finance minister.

Professor Biman Prasad, who is also co-deputy Prime Minister, said that any decision to make such changes lay solely with the government.

“We are obviously going to look at all the reports, all the recommendations, but at the end of the day, it’s government that will decide what is the best course of action,” he said.

• READ MORE: Other Fiji economic summit reports

“We want to balance our revenue, our expenditure — but also our support and continue assistance to those who are most vulnerable, those who may be living in poverty, those who have low income.

“This is a government which had started already on a good footing.”

He said they were committed towards assisting the people, as they had done through the back-to-school assistance and extension of the bus fare subsidy.

“This government is firmly focused on looking after our people, but also making sure that we improve our health infrastructure, health services and that is what has come out of this [National Economic Summit].

“We are confident that despite all the big challenges that we have, the government is firmly focused on taking this country forward.”

Shayal Devi is a Fiji Times reporter. Republished with permission.

SPECIAL REPORT: By a Pacnews correspondent

Catherine Mori began her career in the tax domain in 1990.

She started as an auditor with the Revenue and Tax Division, but she held the position of a Revenue Officer III. And in that capacity alone, she was required to perform various tax-related functions.

As a Revenue Officer III, Mori had had to assist customers with their tax returns, input tax roll, and also input income tax, and transmit these to the headquarters in Pohnpei.

• READ MORE: Other reports in the OCO/Pacnews Pacific Women in Customs series

She was also tasked to assist customers with their import transactions, and carry out daily bank deposits, amid other duties. In December this year, Mori will have completed 31 years of service with the organisation.

“I am the oldest female on this job and maybe also in the Department of FSM Finance,” she says.

The merge
At the time Catherine Mori joined the Revenue and Tax Division, the institution operated separately from the Customs Division. And in 1998, the two institutions merged to form the Customs and Tax Administration under the Department of FSM Finance. During that transition, employees of both institutions had to undergo cross trainings in areas of tax revenue and customs.

“That year was a big adjustment for me,” Mori recalls.

The merge meant that aside from her already-hectic work schedule, she also had to carry out an additional role of a Customs official at the island nation’s port of entries.

Underpinned by the lack of manpower, Mori had had to leave her office work aside and attend to inspection and clearance duties, involving cargoes at the airport, the dock and or at the post office.

And to ensure efficiency in productivity, she says she has had to be patient in all areas of her responsibilities.

The leader
Seventeen years of service and commitment with the Customs and Tax Administration paid off for Catherine Mori. In 2007, she was promoted to the position of Deputy Assistant Secretary in the administration’s field office in Chuuk State, Micronesia.

Chuuk State is the most populous of the four States in the FSM – including Pohnpei, Yap and Kosrae – which according to the April census of 2010 had 48,654 inhabitants.

As the Deputy Assistant Secretary, Mori now plays a more managerial role. She oversees the overall operation of her unit that includes human resources, revenue and customs collection.

“My duties now include overseeing the work of my employees, making sure the post office, the airport as well as the ship port are attained well and cleared,” she says.

“I do monthly reports on all areas of both customs and revenue collections, monthly reports on PC Trade and awareness in the field office.”

She also has to ensure that deposits of collections are maintained and sent to the central office in Pohnpei daily.

Embracing cultural challenges
Mori openly declares her love for what she does and her positive approach to the challenges she faces. But she notes the challenge of conscience between the matter of gender in the workplace and her present cultural landscape.

“I have enjoyed my job all my life, learning to get along with others, learning how to communicate, and experiencing new ideas.

“But overall, my challenge on the job is being the only woman in the position.

“In Chuuk, Micronesia, males are mostly the heads in all departments.

“It was hard for me to speak up, and it was not because I was scared but it is because of our respect for men.”

And it is because of their culture in Micronesia, especially for Chuuk State, that they are still adjusting to the modern way of life.

“Nowadays, because people go out of FSM to the United States or Hawai’i, they have come a long way to understand that women do not only have a place at home but they also have a place in departments and offices.

“Today, I am very happy with my job. I feel free working among many males on the job and getting acquainted with my colleagues.

“I gain more experience working with the male on the job. It helps me to gain more experience in the work I do.”

She adds this has also helped her family understand and support her in her work.

The covid-19 pandemic
This pandemic has adversely impacted the world in many ways, largely on human lives lost and global economic collapses.

Again, Catherine Mori capitalises on her natural ability to take a positive approach and look on the bright side.

Her work schedule has changed significantly, in particular with limited flights and cargo ships.

“For me, this means I have more time to rest and more time to spend with the family. It has helped me to relax and enjoy life.”

This article is part of the OCO/Pacnews Pacific Women in Customs series to celebrate the achievements of women customs officers in the Oceania region.

National’s economic policy of temporary tax cuts for next month’s New Zealand general election yesterday proved – if proof be needed – that they are unapologetic neoliberals.

While their claim that with more money in their pockets people will spend more might sound attractive, the reality is that tax cuts always benefit the wealthy and make the lives of folk on lower incomes worse.

Why?

READ MORE: Other Bryan Bruce columns on Asia Pacific Report

Because we know from bitter experience that neoliberal trickle-down theory widens the gap between the rich and the poor and even the most cursory look at National’s tax cuts announcement confirms that a vote for them is a vote for the ME society, not the WE society (especially if they hold political hands with ACT to form the next government).

For example, under National’s scheme if you were to earn between $20,000 and $40,000 a year you would receive roughly an extra $8 a week, while if you were to earn $90,000 and over you would have $58 more in your pocket.

We know that people on low incomes spend every dollar they have just to get by, whereas wealthier people don’t. So high income earners who receive extra money can invest it in things that increase their personal wealth but don’t necessarily contribute to the public good.

Logic also tells you that the less money a government collects the less it has to spend. This means that under National there would be cut backs in vital services like Health and Education – the very things that the rich can already buy but the poor desperately need to stay well in the covid-19 economy and also improve their lot in life.

If Labour were brave
If Labour were brave they would turn this National tax policy on its head with a progressive tax that raised the level for those on incomes over $90,000 and lowered the rate for Kiwis on low incomes, because THAT would be a move in the direction on Well-being and the WE society.

That said, I do think that Labour’s approach of more state involvement in the marketplace, which proved so effective in getting us out of the Great Depression, is a far better way of fixing a broken economy.

The government can create money because it has its own bank. It can also borrow money at very, very low interest rates and pass that benefit on to its citizens in many ways – such as cheaper housing.

Economic policy statements by the Greens such as “People with the least ability to pay tax should pay the least as a proportion of their income, while those who can pay more should do so to contribute to the welfare of society” suggest they want to close the gap between the rich and the poor.

But while their full economic policy certainly contains lot of feel good factors in it, I would really like to see some specifics from them. For example – How much would each income tranche pay in progressive tax and other taxes under a Green-led government? (Since writing this, however, I am now reliably informed the detail is on Page 21 para 12.2 of their policy! This really needs to be upfront info).

NZ First Economic policy ??… umm.. well when I Googled it I found a couple of news items where party leader Winston Peter’s made statements back in March to the effect that there would be no personal or company tax increases and a No to such things as a Capital Gains tax .

Coalition agreement reference
Their approach, as best as I can garner it from news items, would, in my view, put them closer to National’s economic philosophy – ie. that private businesses, more than state intervention in the market place, is the way to deal with the economic crisis we are facing: Their ideas of special tax concessions for certain business start-ups in rural and regional New Zealand, an Instant Asset Write-Off Scheme – allowing small businesses with turnover less than $1 million to claim immediate deductions for new or second-hand plant and equipment purchases such as vehicles, tools and office equipment up to a combined value of $3000 annually and so on.

However if you go to NZ First’s website and click on “policy” you get a reference to the coalition agreement. Nothing is immediately clear and I shouldn’t have to hunt for a party’s economic policy.

If you are looking for a completely different approach to running our economy there are the Social Credit Party and The Opportunities Party, both of which advocate state intervention in the economy.

Social Credit’s website, for example, promotes the idea of using the Reserve Bank to create money rather than the current system where the commercial banks are basically given a licence to do it.

They would get rid of GST and replace it with a Financial Transaction Tax . They want a maximum payment of $20 for all GP and dentist visits, no tax on the first $20,000 of income, no fares on all urban public transport, a “Child Dividend’ of $30 per week for all children under 18, a guaranteed minimum income for all low income earners, a rent-to-own public housing programme an grants for relocation to lower cost parts of the country

The Opportunities Party on the other hand is promoting such things as a Universal Basic Income of $250 a week for everyone no questions asked, the introduction of a property tax, taxing houses the same as other assets and a tax on sugar and junk foods.

Does this help clear the fog of choice in the up coming election for you a bit …or not?

Over to you.

Bryan Bruce is an independent filmmaker and journalist. The Pacific Media Centre is publishing a series of occasional commentaries by him during the NZ election campaign.

The selection of Judith Collins by her colleagues as the new leader of New Zealand’s opposition National Party is a last minute throw of the political dice that might just save the Right from splintering at the upcoming election.

One of the problems of the political Left over the last 30 or so years is that it has been fragmented with voters under MMP choosing between Labour, Greens, TOP and Maori Party to name a few, along with NZ First as a centrist party. Whereas the Right has, until now, been solidly National with a much smaller ACT party.

The resignation of Todd Muller yesterday may see a number of traditional National Party voters move to ACT this election, but the selection of Judith Collins as leader will certainly do much stem that flow.

READ MORE: ‘Common goal – oust government’, says NZ’s new National leader Collins

While Judith Collins is a person with very different political views to my own I have to say she is a skilled politician and front-footed last night’s press conference in a way that immediately confirmed Muller’s own assessment of himself that he was not the right person for the job.

For me however there was one particularly revealing economic policy moment when she was posed a rare and intelligent and searching question very late in the gathering.

“What would be your general approach over the next three years?” the unseen journalist asked.

“ Would you borrow more? Would you cut the spending would you raise taxation. Would you try to pay the debt back or would you leave it to roll down through the generations?”

Tension-relieving joke
To which she responded with a tension-relieving joke before saying:

“It’s pretty obvious that the National Party is not the party of big taxes . We are the party of sensible spending, we’re a party of infrastructure, we’re a party that believes in investing. We’re not stupid with money because we always know that somebody has to pay it back and the last thing that we want is to leave a legacy for the next two generations to pay back on.

“These are the sorts of views that we are taking into this [election] and that’s where we are always better than the other people because we know that we have to pay it back.”

I’ll have more to say about the economic policies of all the political parties in the coming days but for now I offer just a quick reaction.

That statement by National’s new leader reflects a pre-covid mentality. It reveals a mindset that pretends the economic world has not dramatically changed, that we are not facing a major recession which may become a deep depression.

Why?

Because during the Great Depression years of the 1930s leaders like Franklin D Roosevelt and our own Michael Joseph Savage understood that in such times government spending is what saves an economy, not penny pinching or leaving it to business to decide .

New post-covid rules
The new rules of the post-covid economy are only just forming. The longer the pandemic runs the deeper our economic problems will become.

Yesterday’s thinking which pandered to the vested interests of the few at the expense of the many isn’t going to cut it .

As for “leaving a legacy of debt “for the next generations and being” a party of infrastructure” – I invite you to reflect on how our schools and hospitals were run down under the last National administration and how, in the 1990s, National Finance Minister Ruth Richardson cut the benefits – with the result that all the diseases of poverty which affect poor children the most all skyrocketed.

So in my view, last night the economic gauntlet has been thrown down .

Labour, Greens and all the others now have to pick it up and clearly state why their handling of our economy will be different from the continued neoliberal approach to running it that Judith Collins re-articulated last night.

Bryan Bruce is an independent New Zealand journalist and documentary maker with a progressive view on politics and economics. This commentary was first published on Facebook and has been republished here with permission.

By Felipe F. Salvosa II in Manila

Reporters have finally got the chance to ask President Rodrigo Duterte on Wednesday whether he would sign a bill granting a new franchise for TV giant ABS-CBN. His response: “I’ll cross the bridge when I get there.”

Duterte, speaking for the first time since his top aide, Senator Christopher Lawrence “Bong” Go, said in a Senate inquiry on Monday that he was displeased with ABS-CBN’s refusal to air a political ad during the 2016 presidential campaign, said he would be put in a “difficult position” if the bill arrived on his desk.

He said he might even ask media to help him out on making a decision. “I will cross the bridge when I am there. Maybe I will call the media to help me out. It is a difficult decision really,” Duterte told reporters following an oath-taking of officials at Malacañang Palace.

READ MORE: The ANC Brief – a threat to press freedom

Duterte nonetheless accepted the apology made by ABS-CBN president Carlo Katigbak over the non-airing of the ad, which Duterte supporters have used as evidence of the network’s alleged bias against the president.

ABS-CBN has said ad limits in the final stretch of the 2016 campaign prevented the airing of the ad. The ad was in response to an attack ad paid for by Duterte’s arch-critic, then senator Antonio Trillanes IV, featuring children reacting to clips of Duterte uttering bad language.

Duterte did not accept a P2.6-million refund from ABS-CBN. On Wednesday, he said ABS-CBN could give it to a “charitable institution of their choice”.

The president also claimed that he had no hand in the quo warranto case filed by Solicitor-General Jose Calida before the Supreme Court, in which the top government lawyer accused ABS-CBN of violating the terms and conditions of its 25-year franchise, which expires on March 30.

‘Healthy distance’
“I kept a healthy distance from it…they are now deliberating in Congress: the lower house (House of Representatives) and the Senate. There is a plan that they will pass a joint resolution. But fundamentally really the decision is with the House, not so much in the Senate, because the constitution says all of these things must originate from the lower house,” Duterte said.

“I leave it to Congress,” he added.

The tussle over the ABS-CBN franchise is widely viewed as a press freedom issue. Duterte last year vowed to block the network’s franchise and accused it of serving as a mouthpiece for the opposition and the “oligarchs”.

The government previously sued Rappler, a news website critical of Duterte, for tax evasion and violating the constitutional ban on foreign ownership in mass media, and barred Rappler reporters from covering government events.

Calida’s petition does not cite the non-airing of the ad. It claims that ABS-CBN went around the foreign ownership ban by accepting investments from foreigners through investment instruments known as Philippine Depositary Receipts (PDRs). It also claimed that ABS-CBN illegally charged subscribers to a digital movie channel and illegally acquired a franchise for a mobile phone service.

ABS-CBN has denied any wrongdoing, and told the Supreme Court on Monday that it had the necessary licences from the National Telecommunications Commission.

Also on Monday, the Securities and Exchange Commission said ABS-CBN did not violate the law in issuing PDRs, which entitles holders only to dividends and not ownership.

The Bureau of Internal Revenue also said the TV network did not owe any taxes to the government, refuting claims by Duterte supporters on social media that ABS-CBN was cheating on its tax payments.

Felipe F. Salvosa is coordinator of the journalism programme at the University of Santo Tomas in the Philippines and a contributor to Asia Pacific Report.

• Rappler challenges president’s ‘media powers’
• Other ABS-CBN reports

Reporters Without Borders (RSF) has called on the Philippine authorities to stop hounding Rappler, after officials confirmed that a previously dismissed defamation action against the independent news website had been revived and last week brought a tax evasion complaint against the site.

“All this would be laughable if the site’s survival were not at stake,” RSF said in a statement yesterday.

The National Bureau of Investigation (NBI), the entity responsible for ordering judicial investigations, tried unconvincingly to explain its decision to revive a defamation complaint that, according to an NBI official on February 22, had been closed because there was “no basis”.

The information that the case had been dropped was a “premature disclosure,” the head of the NBI said yesterday.

Meanwhile, the Bureau of Internal Revenues (BIR), a Finance Ministry offshoot announced on March 8 that it had filed a complaint accusing Rappler of evading 133.86 million pesos (US$2.5 million) in taxes.

‘Ludicrous’ complaint
No credible audit was produced to justify this extraordinary sum and Rappler editor Maria Ressa described the complaint as “ludicrous”.

“The behaviour of these various government agencies towards Rappler are tantamount to persecution,” said Daniel Bastard, head of RSF’s Asia-Pacific desk.

“We call on international bodies to step up their pressure on the Philippine authorities for an end to this offensive against media freedom.

“At the same time, we hail the complete transparency of Rappler’s administrators, which is the best weapon against these crude manoeuvres by President Rodrigo Duterte’s government.”

No let-up in harassment
President Duterte’s declared war on Rappler was stepped up in January when the Securities and Exchange Commission (SEC) announced that it was revoking the website’s licence on the grounds that it was not 100 percent Philippine-owned.

The site has appealed against this decision on the grounds that its sources of foreign funding have no shares in the company and therefore no decision-making power.

Omidyar Network, the philanthropic investment firm that is Rappler’s main source of foreign funding, announced last month that it was donating its Philippine Depositary Receipts (PDRs) to 14 Philippine managers of Rappler in order to ensure that the SEC had absolutely no grounds for its “unwarranted ruling”.

It was this move by Omidyar Network that accounts for the defamation and tax evasion complaints of the past few days. The authorities needed new ways to keep hounding Rappler, said RSF in the statement.

With the Office of the Solicitor-General and the Department of Justice, a total of five government entities are now bringing pressure to bear on a media outlet that has made a name for itself with its investigative coverage of government corruption and abuses.

‘Grave concern’
Despite Rappler’s defensive measures, Duterte has used these attacks to obstruct the activities of the website’s reporters.

Pia Ranada has been denied access to the Malacañang presidential palace since last month although she is Rappler’s accredited Malacañang correspondent.

After RSF referred the issue to the United Nations in January, three UN special rapporteurs said they were “gravely concerned” about the government’s attempts to shut down Rappler.

By way of response, President Duterte referred to UN human rights experts last weekend as “sons of bitches” and said they should be fed to crocodiles.

RSF is conducting a thorough survey of media ownership in the Philippines, which is ranked 127th out of 180 countries in the 2017 World Press Freedom Index.

• Reporters Without Borders
• More Philippine articles
• Duterte’s dangerously zero idea of independent journalism

Pacific Media Centre Newsdesk

Oro Governor Gary Juffa has commended the Papua New Guinea government’s move to review its tax collecting efforts for next year.

He says line agencies must examine companies that are breaking or evading Papua New Guinea’s taxation laws.

The government will go into 2018 with a plan for collecting taxes in areas that have had less enforcement of taxation laws.

Governor Juffa, said he was starting with businesses in his province, according to the laws of line agencies — such as the Labour Department, the Internal Revenue Commission and PNG Customs — to review their regulation and compliance systems in managing companies which evade taxes and fees.

The move taken by the Oro provincial government is based on the size of the company, the past behaviour of the company and the sector in which the company operates.

Asia Pacific Report republished EMTV News items with permission.

What do some bankers and fund managers, a few senior government officials, a dozen top taxpayers, and a handful of companies located in the Philippines have in common?

They are among some 200 Filipinos, Philippine residents, and corporations that own or are linked to offshore accounts in tax havens across the world, according to the “Paradise Papers” cache of 13.4 million confidential electronic documents that had been leaked and exposed this month.

READ MORE: PCIJ’s Malou Mangahas to speak at Pacific Media Centre’s 10 years On event in Auckland

While having offshore accounts is not a wrongdoing per se, in some cases, these may be used to avoid or evade tax payments in their host countries, hide unexplained wealth, or move illicit and fraudulent financial flows across borders.

The latest expose by “Paradise Papers,” which has led to stories by media outfits such as the BBC and the UK newspaper The Guardian, covers offshore investments made by the law firm Appleby and corporate service providers Estera and Asiaciti Trust in 19 tax jurisdictions in the world.

About 120,000 people and companies are enrolled in “Paradise Papers,” including Philippine citizens, residents, and business entities.

Leaked papers
The “Paradise Papers” data files were leaked to the German newspaper Süddeutsche Zeitung, which shared these with the International Consortium of Investigative Journalists (ICIJ) based in Washington, DC, and its global reporting network of over 380 journalists from 100 news organisations, including PCIJ.

PCIJ reviewed the list with special attention to apparent transparency and accountability issues. PCIJ thus sent inquiry letters to about a dozen individuals who had served as senior state officials, donated to candidates for president, own or run major corporate entities, or are tied to contracts with government.

Not all the Philippine accounts are active as of the current year. Most accounts are listed to be operational still while some turned out to have been dissolved already, according to those PCIJ reached for comment.

PARADISE PAPERS: For the full list of persons and companies, check out ICIJ’s Paradise Papers database

This is the second round of PCIJ reporting on offshore accounts with ICIJ. In 2013, PCIJ wrote about the offshore ties of then re-electionist Ilocos Norte Gov. Maria Imelda “Imee” Marcos, then senator Manuel “Manny” B. Villar Jr., and then senatorial candidate Jose Victor ‘JV’ Ejercito. They all failed to disclose their interests offshore in their Statements of Assets, Liabilities, and Net Worth.

Five of those PCIJ sought for comment, as well as replies from the law and accountancy firms that had assisted them, invariably disowned or denied any wrongdoing had been committed in regard to their offshore accounts.

But Filipino and Philippine-based offshore account holders may have nothing to worry about for now. At present, the Philippines has neither law nor rules, nor any effective regulatory framework for monitoring or even recovering taxes possibly due from monies in these accounts.

Split opinion
Also, between former and current finance officials, there is a split opinion on what the Philippine government should do to regulate such accounts and to run after their owners.

Interviewed recently by PCIJ, former Internal Revenue Commissioner Kim Jacinto-Henares said that in her view, when someone or some entity opens an offshore account, that should raise concern at once among government officials.

In contrast, Finance Secretary Carlos G. Dominguez — who admits his connection to an offshore account himself until 2001 – told PCIJ that “there is nothing illegal per se about these accounts… and we are not about to declare them illegal”.

“Actually,” Henares said, “nobody can stop you from incorporating anywhere in the world.” But, she said, “the question is if that company has an asset that matches (its) net worth.”

She pointed out, “The important thing to ask is if the tax for that had been paid, and second, did it come from questionable deals. Kasi ‘yung galing sa masama rin, hindi mo rin binabayaran ‘yung buwis (Because if it came from something illegal, you wouldn’t pay the tax due).”

Why hide monies?

Henares continued: “Ibig sabihin, hindi mo siya maipasok mainly sa pangalan mo kasi hindi mo ma-explain saan nanggaling ‘yung income, saan galing ‘yung pera. ‘Yun lang naman ‘yung tinatanong d’yan, pero itself, wala namang problema (In other words, you couldn’t place it under your name because you won’t be able to explain where the income was sourced, where the money came from. That’s really the only question there, but itself, there’s no problem).”

It’s a question, according to her, of what would drive someone or some entity to open an offshore account. “Siyempre, medyo may tanong lang na ano bang objective mo (Of course, there’s a bit of a question there on what really your objective is),” Henares said. “Parang lahat ng tao feeling nila na kapag Pilipino ka, naiisahan mo ‘yung gobyerno mo. Bakit mo ginagawa ‘yan? (So everyone starts feeling like, if you’re a Filipino, you can easily put one over your government. Why do you do that?)”

‘No law, not illegal’
Dominguez takes the contrary view. Indeed, he said that there is no clear, cogent legal framework to regulate offshore accounts, but getting one “would require legislation by Congress.”

At the moment, he said, “we’re all focused on the tax reform bill until December.”

“But really,” Dominguez said, “there is nothing illegal per se about Filipinos or Philippine residents opening accounts overseas.” Still, he said that “when information like this comes out, then we look at it case by case.”

“In truth, there is nothing illegal about it,” Dominguez said. “It is legal, and we are not about to declare it illegal.” He then cited one instance when he was told that a friend of his staff had planned to open a dollar account in Hong Kong to buy bitcoins. Recalled Dominguez: “I told her, ‘Go ahead, that’s okay’.”

These comments by the Finance Secretary came on the fourth time that PCIJ had called him in the last month, to follow up on a request letter for an official opinion on offshore accounts from his department.

PCIJ mailed its letter to Dominguez last November 8, prompting a quick call from him; at the time, though, he was still in Vietnam for the Asia-Pacific Economic Cooperation Summit (APEC).

Working group promise
He promised then that he would organise a technical working group of his staff, as well as officials of the Bureau of Internal Revenue, and — if they would agree, he said — of the Bangko Sentral and the Anti-Money Laundering Council.

The ASEAN (Association of Southeast Asian Nations) Summit intervened and kept Dominguez busy for a week. He received PCIJ’s second and third calls during the week, however.

Last November 16, he said, “My staff will write you a letter. We discussed this yesterday. There is no law prohibiting anyone from opening offshore accounts. It’s allowed by law.” Offshore accounts “may be a tax leak for us,” Dominguez said, “but it is a small leak.”

He added that offshore accounts are a lesser problem than tax incentives that some companies and sectors have been enjoying for so long. “We have a list of tax incentives given, and you’d be surprised how big those amounts are,” Dominguez said. “Some have been receiving tax benefits for over 40 years.”

Tax leakage on account of incentives given to corporations is, in Dominguez’s view, “a more important issue than someone buying, registering a plane or cargo vessel — that is a one-off thing.”

In an offshore leaks database reported in 2013, Dominguez’s name had actually come up as an offshore account holder. The company listed in his name was called Radstock Corp.

Connection admitted
When PCIJ asked Dominguez about this, he promptly acknowledged his connection with Radstock.

“I saw that before,” he said. “I was involved with them a long time ago, 2001 ‘ata.” As he recalled it, his engagement as a director of Radstock was connected with a project of the Philippine National Construction Corporation.

Like Dominguez, many other finance experts say that offshore accounts are legal. They also note that these are rather common among multinational enterprises with global operations.

Yet when account holders turn to tax havens offshore to avoid or evade paying taxes, hide illicit wealth, and conduct illegitimate or abusive financial flows in secret, they cross over to forbidden territory in law.

Evade, avoid taxes
International companies, finance experts say, operate in tax havens to be able to transfer the taxable income to jurisdictions where tax rates are lower. Companies that make profits in the Philippines, for instance, can transfer these to other jurisdictions. This means that what should have been part of the tax base of the Philippines becomes instead part of that of another country.

Tax havens also use secrecy as a prime tool to hide identities. Individuals and entities can hold shares in offshore companies without being identified, unlike in the Philippines where incorporation and registration records are public.

Too, one can sell shares offshore without having to pay capital-gains tax.

Secrecy jurisdictions provide structures that enable people or entities to skirt or undermine laws of their home country or jurisdictions elsewhere. In the Philippines, the lack of a legal and regulatory regime over offshore accounts makes it difficult for government to run after tax evaders and money launderers.

According to the Tax Justice Network, between $21 trillion and $32 trillion of private financial wealth is located, untaxed or lightly taxed, in tax havens around the world. Illicit cross-border financial flows have also been pegged at $1 trillion to $1.6 trillion per year, a huge amount compared to the $142.6 billion in global foreign aid in 2016.

Founded in 2003, Tax Justice Network or TJN is a UK-based independent international network that conducts research, analysis, and advocacy on international tax, the international aspects of financial regulation, the impact of tax evasion, tax avoidance, tax “competition,” and tax havens. Not aligned with any political party, TJN has global and regional partners in Africa, Asia, Africa, Europe, Latin America, and North America.

TJN has a Financial Secrecy Index that ranks jurisdictions according to their secrecy and the scale of their offshore financial activities. The higher the rank, the more secretive financial activities are in the country.

The scoring is based on an assessment of 15 secrecy indicators that can be grouped around four broad dimensions of secrecy: knowledge of beneficial ownership, corporate transparency, efficiency of tax and financial regulation, and international standards and cooperation.

Of the 92 countries surveyed by TJN for its 2015 Index, Bermuda was ranked No. 34 and Isle of Man at No. 32. The Philippines was 46th. Switzerland, Hong Kong, and the United States are first, second, and third, respectively.

The Financial Secrecy Index reveals that the stereotypes of tax havens are misconceived. Said TJN: “The world’s most important providers of financial secrecy harbouring looted assets are mostly not small, palm-fringed islands as many suppose, but some of the world’s biggest and wealthiest.”

Wanted: Evidence
As of this posting, PCIJ has yet to receive a written reply from Dominguez himself, or even from the “technical working group” that he said he plans to convene to study the matter of offshore accounts.

He tossed PCIJ’s query letter to Finance Undersecretary Antonette C. Tionko, who recently replied to PCIJ. She said in part that they had “gone through the attached list which contains names of Filipinos and a few foreign corporations which appear to have Philippine ownership (although this is not clear considering that only the name of said corporations are provided).”

“Please note,” Tionko said in her letter dated November 22, “that under Philippine tax laws, income of Filipino citizens are subject to Philippine income tax regardless of where earned. On the other hand, only income of foreign corporations from Philippine sources is subject to Philippine income tax.

“Hence, if we assume that the listed corporations are all foreign corporations, evidence must be presented… that income is earned and not reported in the Philippines to constitute a violation of the Tax Code.”

She then asked for “further information” on the Filipinos on the Paradise Papers list. According to Tionko, information “such as purported types of investments, amounts of said investments, and the like will be relevant in determining whether or not there is a violation of Philippine laws.”

Global vs local firms
To Henares, meanwhile, big companies and top taxpayers who have offshore ties are not suspect. She is more concerned, she said, about those on the list who have no global business or reason to have offshore companies.

Asked Henares: “If you have no international corporation, then what are you doing there?”

Henares said that she welcomes having more information into offshore transactions primarily because without information and appropriate regulations, governments have no way of running after tax evaders who hide their wealth offshore.

The BIR, with Henares at the helm, had set to investigate Filipinos with offshore accounts following PCIJ’s 2013 report. But Henares said she could not recall updates on the planned investigation.

When contacted by PCIJ on the matter, BIR Assistant Commissioner Marissa Cabreros said that the Bureau cannot confirm or deny any information about it because its staff are bound by law to keep silent.

In any case, Henares said that the country’s strict bank secrecy law in a way already offers “a domestic haven” for people who may want to hide their cash assets. Tax havens offshore meanwhile offer options for people who may want to hide their ownership of properties.

“Let’s say,” she said, “without knowing how much they have in the bank, we already know they’re deficient by P1 million. What more if we have that bank figure? It would be much, much more ‘di ba? Then what more if we have the information about the international (accounts)? Then it could become much, much more din.”

Information exchange
The OECD Global Forum for Tax Transparency was specifically set up to address the risks to tax compliance posed by secrecy jurisdictions. Global Forum members, among them the Philippines, had agreed to implement transparency and exchange of information for tax purposes. This includes the Exchange of Information on Request (EOIR) and the Automatic Exchange of Financial Account Information (AEOI), which requires tax administrations to exchange taxpayers’ financial information.

Henares clarified, however, that the Philippines is involved only in the EOIR, which allows the BIR to exchange information only with a country that the Philippines has a tax treaty with.

The Philippines was reviewed as “largely compliant” in the first round of the EOIR review. But it currently has treaties with 41 countries only; it has no tax treaty with many of the popular tax havens.

The OECD and the Council of Europe also developed the Convention on Mutual Administrative Assistance in Tax Matters, which is said to be the “most comprehensive multilateral instrument available for all forms of tax co-operation to tackle tax evasion and avoidance.”

The convention not only provides for exchange of information, but also includes assistance in recovery, the service of documents, and facilitation of joint audits.

The Philippines signed onto the agreement in 2014 but has yet to ratify it.

The article was published by the Philippine Center for Investigative Journalism (PCIJ) and is republished here with permission.

Never before has Labour come from 23 percent to be neck and neck with National. Jacinda has touched people and made them feel like they can believe again and that is a force that cannot and will not be told by rich right-wing broadcasters to go home and be quiet.

Now is the time to show National that lies, deception and deceit will not be rewarded by the people of this country. Let National learn that vision, hope and compassion will always beat cynicism, corruption and venal self-interest.

Rather than tell us why after 9 years they have failed the homeless, the first home buyers, the mentally ill, the hungry kids, the workers on flat wages, the women on gender biased wages, our waterways choked with cow filth, the children in underfunded and overcrowded classrooms and a health system strangled by debt – rather than tell us why after 9 years they’ve failed each of those segments of our society, National have spent this entire campaign lying about Labour.

I am sick of it! It is disgraceful and desperate behaviour that undermines the trusted positions they hold.

There is no $11.7 billion dollar hole in Labour’s budget. It is a total lie.

Not one New Zealander will pay more in income tax than they are paying now if Labour win! Another complete fabrication by National!

Dangerous falsehood
And as for Deputy Prime Minister Paula Bennett’s claim that the only reason inequality is so high is because of the Christchurch earthquake and not deeply flawed social policy – well, anything that comes out of Paula’s mouth is questionable at the best of times, but trying to blame inequality on a natural disaster is a delusional dangerous falsehood.

And I was rapt that Phil Twyford gave it to her and the National Party this morning on the AM Show and said it how it was, which was National are without doubt, just a bunch of liars.

The thing that gets me though is that National know they are lying, and then they are supported by a right-wing New Zealand media.

Take the latest Colmar Brunton Poll – added together, Labour + Greens + NZ First will be the new government, but is that the story the right-wing media are telling you?

They are saying that Jacinda’s “fairy dust” has failed her, that the momentum has stopped and that anyone wanting real change this election should just go home, head bent with their tail between their legs for daring to hope.

Once in generation victory?
I call that out and denounce it.

This will be a once in a generation victory if you and your friends and whanau vote.

I will never stop fighting for the people – Māori, Pasifika, women and working class; and I call on each and every decent New Zealander to rush to the voting booths now and bring in a new empathy and a new direction.

Vote as if your life depended upon it – because for many of our children, sick, elderly, brown and poor, it really does.

Kia kaha!

Willie Jackson is an independent Māori broadcaster and list candidate for the Labour Party. This column is republished from The Daily Blog with permission.

Tongan Prime Minister ʻAkilisi Pōhiva has hit back at reports that he told a press conference that “Chinese businesses in Tonga did not pay any tax at all,” claiming his words were “twisted” in the media, reports Kaniva News.

Pōhiva also said reports that he said the Chinese would take over the country in the future were taken out of context.

Pōhiva told Kalino Latu of Kaniva News in an interview in ‘Atalanga, Auckland, that what he told media was that a Chinese company, Yan Jian Group Co Ltd, did not pay any tax at all.

The embattled prime minister’s government faces a lawsuit hearing on Friday over changes at the state-run Tongan Broadcasting Commission that are being condemned by critics as an attack on media freedom in the kingdom, Radio NZ International reports.

The sacked head of TBC, Nanise Fifita, can continue in her job until the judicial review of the dismissal is heard.

Pōhiva told Kaniva News: “I did not mean all the Chinese businesses in Tonga did not pay tax. That was not true.”

The Yan Jian Group has operated in Tonga since 2009 as the principal contractor on a major roads improvement scheme with the aid of the Chinese government

Court case revelation
Pōhiva said he was surprised when it was revealed in a recent court case that the former government had agreed to allow the Yan Jian Group not to pay any taxes.

The revelation was made during a Land Court hearing in which the judge ordered Lord Nuku and the Yan Jian Group Co Ltd to pay the current Lord Luani TP$5,556,000 (NZ$3.5 million) in compensation for a dispute over a block of land in Malapo.

Lawyer Sione Fonua, who acted for Lord Luani, told Kaniva News the Chinese company did not pay taxes and did not file any annual returns with Inland Revenue because of its agreement with the former government.

It has been estimated the company was given TP$80 million for the project.

Regarding reports that Pōhiva had said the Chinese would take over the country, he said he emphasised that only those who were working hard would control the country.

He said he then referred to the hard-working Chinese as an example.

He said his comments had been wrongly portrayed as if he was having a conspiracy with the Chinese or he was supporting them to take over the country.

• Former adviser calls for Tongan PM to resign

New Zealand’s 2016 budget offered Auckland nothing in the way of vision or hope and it continued the National government’s threats against the Auckland Council. Threatening the council with over-riding its democratic processes if it fails to release land for housing is a bullying tactic aimed at diverting attention away from the fundamental problems with housing in the region.

Even the Minister of Social Housing recognised the fact that this was going to be a “hopeless” budget for Auckland which explains why she rushed out her own mini budget on the eve of the non-event to demonstrate that at least one member of the government was aware that Auckland had a major housing crisis.

As the major population centre for New Zealand and the country’s portal to the global economy, Auckland matters! Over half of New Zealand’s population lives within a 200 km radius of Auckland and it is this size and population density that enables the region to provide business with economies of scale in production, marketing and sales.

More than any other factor it is the population base that defines the character and potential of Auckland. Apart from small and belated adjustments to the tax system for small business entities there were few policies in the budget to generate hope among the business sectors of Auckland.

Beyond business there was a virtual drought of initiatives that demonstrated government barely recognised, let alone valued, the working people of the region or its future generations.

Social deficit
The mini budget delivered by the Minister of Social Housing targets one aspect of the region’s social infrastructure. It fails, as the budget itself fails, to deal with a region containing one-third of New Zealand’s population including local board areas within Auckland that are larger than most provincial cities and regions.

As we highlighted in a recent report on the governance of Auckland, the social deficit has become a major concern for the region. It is deficit characterised by widening disparities of income and wealth, distinctions between “work rich” and “work poor” households, and increasing numbers of families and households living with the stress of insufficient money for basic necessities and limited access to affordable housing.

The challenges faced by different populations and groups in Auckland is graphically illustrated by the Pacific Island communities of the region who have few accumulated assets, limited employment opportunities relative to other population groups, and because of difficulties in acquiring affordable housing they are increasingly reliant on rental accommodation.

Pacific people came to this country with high expectations for themselves and their children. The adult members of these Pacific families played a significant role in the New Zealand economy during the 1960s and 1970s and they continue to make a contribution to many aspects of New Zealand life today from sport to fashion, from the creative industries to engagement in the tourism and service sectors.

Yet the age structure of Pacific populations means that they face additional challenges with nearly half of Pacific people being under 20 years of age. In Auckland, nearly 25 percent of children under the age of 10 live in Pacific households and 40 percent of those are living in Manukau.

Socially bankrupt
These were the families singled out by Minister Bennett as the families who might benefit from her $5000 subsidy aimed at encouraging them to leave Auckland – a socially bankrupt policy that would take households away from their family and friendship networks and from the support systems they have established in Auckland.

When you move from the social deficit facing Auckland to the state of the region’s physical infrastructure and utilities then we are confronted by a history of neglect. Central governments over several decades lacked any long-term spatial vision leaving the region with a major infrastructure liability and a transport shambles.

On top of these legacies, Auckland has recently had to accept the additional costs of migration and tourism with inadequate funding, a deteriorating housing and accommodation stock and totally inadequate compensation.

To make matters worse the deficit that has been incurred by Auckland’s physical infrastructure and utilities has been exploited by moneylenders and dealers speculating in land and housing and locking a generation of young families out of the housing market.

Where were the policies in this year’s budget aimed at controlling the unbridled power of capital and greed controlling land and housing in Auckland? Where was the commitment from central government to playing its part in addressing the regional deficits in both the physical and social infrastructures?

Where was the vision capable of matching the late Dove-Meyer Robinson who sought to build a rapid rail system in Auckland only to have his aspirations neutralised by central government? Where was the enthusiasm and support for Auckland council’s objective to build “the world’s most liveable city”? What Auckland got from the budget and in subsequent statements from Cabinet Ministers was threats to over-ride the regional government based on a flawed argument with no substance, no evidence and no credibility.

Auckland deserves a more considered response and that means a comprehensive range of policies that address the needs and aspirations of the region rather than a negative party strategy based on pork barrel politics. A desire to work in collaboration with the Auckland Council was sadly missing from last week’s budget.

Professor Ian Shirley is director of the Policy Observatory of Auckland University of Technology. This analysis was first published by the Policy Observatory and is republished by Asia Pacific Report with permission of the author.

The Policy Observatory