15 April 2011
Is New Zealand a tax haven? By opposing the conversion of the United Nations Tax Committee into a specialist enforcement body, New Zealand is seen as a supporter of tax havens and those who move illicit funds into such jurisdictions. Nicholas Shaxson, a campaigner and author of books about tax avoidance claims New Zealand is “letting down the developed world” and within a few years will join rogue nations listed on the Financial Secrecy Index, published annually by the Tax Justice Network.
The 60 countries on the current index “qualify” because of banking secrecy laws, and the aggressiveness shown in protecting that secrecy. It is not just traditional secret banking countries like Switzerland and Liechtenstein that are identified. Britain and its satellite jurisdictions feature– including Channel Islands, Guernsey, Jersey, Isle of Man, Gibraltar, Cayman Islands, Bermuda, British Virgin Islands, Turks and Caicos, Belize and Montserrat. But so too do some of our neighbours, Cook Islands, Samoa, Nauru, Vanuatu, and the Marshall Islands.
The New Zealand support for OECD rules is seen as reinforcing systems which favour rich countries over the poor. The move to strengthening UN capacity is seen by its advocates as combating massive sums being expropriated from the developing world.
New Zealand to date has also stood out from ratifying the UN Convention against Corruption – one of a small group of developed countries to do so – although Japan, Germany, and Singapore haven’t ratified either. However many member states of that convention appear to make little effort to give effect to its obligations – including India, which indicated this week that it will become a full member despite little evident commitment to moderating rampant corruption.)
The founder of the Tax Justice Network agrees with Shaxson. His view is that “New Zealand likes to play all innocent on this issue but it’s pretty pernicious. And opprobrium should follow”.
Maybe New Zealand, like many people in business, figures that if it makes enough money through shady dealings it can later buy back its integrity.