Sunday, November 20, 2016

Multinationals Not Paying Tax Is A Legal, Fiscal & Ethical Issue - Not Just 'Bad PR'

I nearly fell out of my chair yesterday evening when Newshub opened an item with a declaration that the Prime Minister was finally talking about multinationals dodging their fair share of Kiwi tax.

My disbelief was understandable. National has spent quite some years now basically attempting to pretend that this problem doesn't exist. When they're queried about this in Parliament, and just straight-up asked whether they think it's an issue that ten billion dollars of sales generates only $1.8 MILLION dollars in taxes for the top twenty multinationals operating here ... they just waffle away - and, at best, suggest that this is an international problem (which, to be fair, it is) which isn't really solvable by New Zealand.

It's always seemed a bit peculiar to me that our comparatively tiny country on the far side of the globe can do mighty things like bringing to a halt French nuclear testing, or thumbing our nose (and actually getting our way) when it comes to the defence policy of a superpower in our backyard ... yet we apparently balk when confronted with slightly tricky issues involving medium-large corporations. It isn't just a matter of taxation or offshore interests, either - consider the ongoing omnishambles we had attempting to wrangle Telecom to properly provide national communications infrastructure (rather than fat dividends for its shareholders) in the early 2000s.

Maybe it's an issue of our Government lacking the requisite willpower and vision to properly deal with corporates. Perhaps they just simply don't care.

In any case, if National WERE actually genuinely interested in getting foreign multinationals to pay their fair share of tax here, I'd be over the moon and singing their praises.

Except they're not.

You see, what actually happened over the weekend at APEC, was John Key took Facebook CEO Mark Zuckerberg aside and told him he had a "PR problem". Not, you understand, a legal problem. Not a fiscal/monetary problem. Not even, quelle surprised, an ETHICAL problem.

No, what the Government believes Facebook's ongoing flouting of our laws and our good natured hospitality is ... is a PR problem.

This is a distinction that's presumably quite instructive. When you have legal problems ... you sue (and, in the post-TPPA National Party, perhaps they've altogether forgotten that it's states who can sue corporations ... rather than exclusively the other way around thanks to ISDS). When you have fiscal/monetary problems, you regulate. And when you have ethical problems ... you intervene.

But when you have PR problems - well, that's different. That simply means you've been caught out via the spotlight of the public gaze. And, more importantly, that it's perfectly fine to keep doing whatever it is that you were snapped for - just make sure it's where the filthy proles can't see you doing it.

PR issues, in other words, are the sort of 'problems' which exist to be 'managed' and 'massaged', rather than actually 'solved'.

John Key, by talking to Zuckerberg one on one, can thus claim to actually be 'doing' something about this issue - while in actual fact doing precious little (other than flapping his lips and garnering another successful-person photo-op). It means he's worked out that his Government has started to look decidedly weak in this area.

If he were serious about sorting this issue, there are a number of potential paths he could pursue. Many of us will remember, at the more harshly punitive end of the spectrum, Labour's David Clark floating the idea of a ban on companies such as Facebook operating here in New Zealand if they can't abide by our laws. Personally, I agree with the spirit of this motion - but given how inextricably important the social media platform has become for so much of our personal lives and daily communications, I question whether I'd support such a measure actually being put into practice.

Cooler heads like New Zealand First's Fletcher Tabuteau, meanwhile, have long been making the case for properly tightening up and toughening up our nation's taxation laws so that foreign corporates like Facebook can't continue to flagrantly get away with this kind of pernicious and parsimonious behavior.

If National genuinely want to see Facebook et co. start to pay their proper taxes (rather than just genuinely no longer wanting to be seen as on the back foot on this issue) ... perhaps they ought to hit Fletcher up, and see what the New Zealand First proposal to fairly tax foreign corporates looks like.

I'm sure we'd only be too happy to help.

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