By Bernard Hickey
The Government has doubled down on its refusal to accept New Zealand's overseas trust sector may be causing reputational damage, blaming opposition attacks on the issue of tax havens for causing the damaging publicity.
Revenue Minister Michael Woodhouse went further in Parliament, saying overseas and local commentators who had called on New Zealand to tighten disclosure rules were ignorant of New Zealand's compliance with OECD rules.
During a third day of angry exchanges in Parliament, the Government was again forced to defend itself against accusations that it had ignored official and other advice to tighten the disclosure rules.
New Zealand First Leader Winston Peters was also ejected from Parliament for a second consecutive day after clashing with Speaker David Carter in the wake of questions about the role of an IRD official, John Nash, who Peters said was also involved in the IRD's investigation of the Wine Box scandal.
"We are not a tax haven. It is really only the Opposition parties in New Zealand that are claiming that," English said in response to Peters, adding the New Zealand First Leader was attacking public servants under the protection of Parliamentary privilege.
Later, Labour Finance Spokesman Grant Robertson challenged Woodhouse on what the Government had done about Transparency International's call for tighter disclosure rules in its 2013 National Integrity Assessment.
"The biggest risk to the reputation of New Zealand is the number of Opposition members who continue to peddle the mischief that New Zealand is a tax haven," Woodhouse replied.
"There are two attributes to a tax haven: one is a very low or no tax rate, and the other is strict secrecy. If New Zealand was a tax haven, we would not have implemented the 13 separate initiatives to give effect to the sharing of information," he said.
Asked comments about New Zealand being a tax haven by international media organisations, tax experts, company formation agents and anti-haven campaigners overseas, Woodhouse said they did not understand New Zealand's current situation.
"When the editorials of almost every daily newspaper in New Zealand, most commentators working in the taxation area, and international journals all say that New Zealand is now a tax haven, does he not think that he should take this issue just a little bit more seriously, or is he just that out of touch?," Robertson asked.
"Clearly most of the commentators that are making those claims do not have the level of insight into what IRD is presently doing, and what powers it has to share information," Woodhouse said in reply.
"I would suggest that the clients of some of those firms may be very unpleasantly surprised to understand what powers IRD does have," he said.
'NZ repeatedly warned'
Transparency International compiles an annual survey of a Global Corruption Perceptions Index. New Zealand has dropped from the top of the index for being the least corrupt in 2012 and 2013, before falling to second in 2014 and fourth in 2015.
“We have repeatedly warned that these factors are being exploited by overseas interests. They are setting up shell companies and trusts for those involved in corrupt and illegal activities, including tax evasion and money laundering.” said Transparency International New Zealand Director Suzanne Snively.
"The recent amendment to the Companies Act of 1993, while strengthening requirements to have a New Zealand Director, fails to require companies to identify all their beneficial owners," Snively said.
"Trusts in New Zealand often do not come to the attention of tax authorities or law enforcement agencies because there is no transparent mechanism for reporting them. They have no presence in measurements of funds held in New Zealand and are often hidden in solicitors’ trust accounts. The picture of New Zealand that emerges from the Panama Papers is another huge blow to its reputation as one of the least corrupt countries in the world," she said.
"New Zealand's trade – essential to our prosperity and the well being of our country’s residents – relies on our reputation for integrity. Immediate and substantial action must be taken by the Government to demonstrate world leadership in restricting the flow of ill-gotten funds and assets."