Tuesday, August 2, 2016

With E.U. Trade At Stake, Will Key Finally Start To Take Our Tax Haven Status Seriously?

Remember when John Key boldly declared that New Zealand was not a tax haven?

Well, the European Union disagrees. And while it might seem rather academic what a transnational institution literally half a world away thinks about our taxation regimen ... the slight issue is that this now means the planet's largest economy is gearing up to put us over in the international naughty corner unless and until we sort our situation out.

Maybe the threat of trade sanctions or even travel bans upon New Zealand produce and citizens by the E.U. will force National to finally take this issue with the gravitas and seriousness that this demands.

Then again, there is a potential other side to this debate. Whenever some great and seismic movement (from our lilliputian perspective, at least) is about to take place in international political economy, it makes sense to ponder the inordinately yet understatedly important question: Cui Bono? Who Benefits?

And the answer to that, in this case, is quite simple. There are any number of French farmers and other European agriculturalists who have lobbied for years to keep Kiwi primary produce as far out of the Eurozone as possible. They represent perhaps the single biggest reason why we're arguably highly unlikely to ever have a proper free trade deal with the Europeans - present and current events with our tax-haven status notwithstanding.

The question ought to be asked: if the Europeans are looking at excluding or downsizing Kiwi trade flows in response to our tax laws ... will they be doing the same for countries like Switzerland? Or is there one rule for some, and another ruleset entirely for those countries who happen to have an enormous comparative advantage in a particular economic sector.

Because at the moment, there seems to be a very real possibility that efforts to put the screws on our exports into the Eurozone are perhaps less motivated by an intergovernmental desire for taxation transparency than they are by frank, rank economic self-interest on the part of the Europeans.

In that case, and if that is the situation, then it is presumably to our advantage that Britain is leaving the Eurozone. At least in that instance, we shall be shortly able to have a productive and blossoming trade-relationship with what's presently the 5th largest world economy.

Still, regardless of the alleged motivation for the E.U.'s actions in this matter - there is a silver lining.

With the kind of serious threat against the New Zealand economy which E.U. trade sanctions (or even the potential for their future imposition) unquestionably represent, the Prime Minister and his cronies surely have no choice but to act and act decisively in order to get our affairs - and our international reputation - back in order.

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