"... What? ...": John Key, when asked which secret trusts were being used for tax dodging, hiding stolen assets and/or laundering money, responded with a nonchalant shrug of his shoulders.
THE PANAMA PAPERS have elicited a remarkably low key
response from the Prime Minister. The Labour Leader, Andrew Little, has
described how John Key, when asked which secret trusts were being used for tax
dodging, hiding stolen assets and/or laundering money, responded with a
nonchalant shrug of his shoulders. The day before, when challenged about the
potential damage to New Zealand’s reputation – now that we’ve been fingered as
a simply dandy spot for masking the millions of Mossack Fonseca’s clients – John
Key told journalists that there were many, perfectly legitimate, reasons why a
foreign investor might park his money in New Zealand, adding that it was quite
wrong to call his country a “tax haven”.
Key’s “ … what? …” reaction to the colossal data leak which
has already claimed the scalp of one prime minister and put the careers of many
other world leaders at risk is rather perplexing. Is he not able to predict the
impact the Panama Papers are bound to have on the privileged privacy of the
global elites? How the 11 million-plus documents are going to be used to prise
open the lid of one of the biggest cans of plutocratic worms the world has ever
seen. Why doesn’t he get it?
There are 55 million answers to that question. For a long
time now John Key’s fortune has dulled his otherwise acute political judgement.
Six years ago, in May 2010, Key’s government came under heavy criticism for tax
cuts conferring huge windfalls of cash upon the wealthiest New Zealanders. Not
yet two years into the job, he struggled to grasp the motivation for his
critics’ outrage.
“We can be envious about these things”, purred the Prime
Minister, “but without those people in our economy all the rest of us will
either have less people paying tax or fundamentally less services that they
provide.”
Seldom has so much of the mythology of the very rich been
packed into a single sentence.
First comes the notion that his fellow citizens’ reaction to
his government’s massive transfer of wealth from the poorest to the wealthiest
members of their society is motivated not by their keen sense of its manifest
injustice, but by simple, old-fashioned envy.
Then comes the argument that without such regular
transfusions of cold hard cash, the very rich will simply up-stakes and leave
for a more congenial jurisdiction. Somewhere that makes them feel welcome – not
like lepers.
Finally, Key goes for the clincher. The notion that it is
the energy and drive, the wisdom and skill, and the hard-earned cash of wealthy
entrepreneurs that provides the rest of us “parasites” with the goods and
services that we are simply too stupid and/or lazy to provide for ourselves.
Ayn Rand couldn’t have put it better.
In the light of this earlier demonstration of Key’s deep
belief in the superiority of the very rich; and in the very different measures
that must be taken of their needs and deeds; should we really be surprised when
he struggles to understand exactly what the persons exposed by the Panama
Papers have done wrong?
If you believed as strongly as John Key does that the very
rich are better than you and me; and subject to a very different set of rules;
then you would probably shrug-off the Panama Papers too.
This essay was
originally posted on The Daily Blog
of Thursday, 7 April 2016.
16 comments:
An interesting aspect of this issue is how the zeitgeist has changed.
For thirty years offshore trusts where neither the settlor or the beneficiaries are New Zealand residents have been a feature of our tax and financial system. For virtually all this time they have not attracted hardly any comment. In fact they were extolled as a good feature of our system by both Labour and National governments.
But the last few years has seen OECD nations much more concerned about tax evasion, so what was once unremarkable now has quite different connotations. Especially when coupled with inequality issues.
I suspect that it is this change in the public mood that has caught the govt a bit flat footed, though I personally think Grant Robinson should also tone down his rhetoric, given Labour's involvement in establishing and maintaining the offshore trust system. But I guess that is politics. You take your chances when they come.
An interesting feature of the disclosures is how many Europeans, especially East Europeans use offshore trusts. Perhaps that is not surprising when you consider the relatively recent history of war, revolution and expropriation in those countries. Keeping the govt away from your assets is going to be much more of an issue for people who know they cannot really trust their govt. The tax issue may only be a part of the reason for these people to use offshore trusts. And the citizens of these countries seem unperturbed by it; perhaps they would all do the same if they could.
That this includes many if not most of Putin's cronies does not surprise me. Given that Putin has deliberately expropriated the assets of his political enemies, he and his supporters will fear the day when the boot is on the other foot.
Conversely in New Zealand, where we have a strong expectation of fundamental trust in our government, irrespective of who it is (forget the froth of daily politics in this since it is not relevant to this basic issue of trust) the use of offshore trusts by New Zealanders is seen as inherently dodgy. We may have many domestic trusts which seems not to raise very many concerns, but the use of for instance a Cook Islands trust or a Bahamas trust would be seen by most people as a device to avoid civic and social responsibility.
Good one Chris! I wonder where Mr Key has parked his money. I'd be surprised if it was in Kiwibank.
I understand that the enabling legislation for these trusts to be set up was implemented by the the Labour Government, led by Prime Minister Helen Clark and Finance Minister Michael Cullen (now Sir Michael Cullen).
Before Grant Robertson has kittens perhaps he should give Sir Michael a ring.
What does the NZ Tax commissioner say on the matter ?.
I would venture to say that John Key and his government have clean hands on this matter, prove me wrong.
What about Kim Dot Con ?.
One thing about the very rich - they are much more likely than the less well-off to invest any extra cash from personal and corporate tax cuts as capital expenditure rather than as consumption. Capital investment tends to generate more jobs than does the one-off act of consumption spending.
"The worst criminals on earth are not the poor who sit behind bars in jails and prisons. The biggest thieves are found among the rich. The 1% can buy legislation, politicians and the media to carry out and hide their dirty work. If they can’t change the laws to benefit themselves in their homelands they simply send their money elsewhere through shell holding companies. This transfer of wealth, much of it diverted from what ought to be tax payments, is an open secret. Panama, the Cayman Islands, British Virgin Islands, Luxembourg and Switzerland are known for securing the money and secrets of the rich and the well connected."
http://www.counterpunch.org/2016/04/06/the-panama-papers-problem/
"Behind every great fortune - a great crime."
Honoré de Balzac
@ Anonymous 13.23
So " Labour did too".....if they did they certainly didn't do it well enough for National (or Key) as they "improved" the legislation in 2011 to make it easier and more desirable creating an explosion in the number of non resident trusts since that time
http://www.chapmantripp.com/publications/Pages/New-Zealand-now-an-attractive-tax-location.aspx
Treat the Panama Papers (and anything else with Soros' fingerprints attached) with caution. Notice that the primary targets are the Empire's favourite villains.
Fascinating discussion here:
http://jackpineradicals.org/showthread.php?8080-Unprecedented-Leak-quot-Exposes-The-Criminal-Financial-Dealings-Of-World-s-Wealthy-Elite
The idea that the rich generate jobs is a myth. Jobs are created by a healthy economy, in which middle-class people or lower class people even – gosh – can afford to buy stuff. Even business publications know this to be true. And sometimes they destroy jobs. Or replace well-paid jobs with zero hours contract jobs. It is estimated that Amazon probably destroyed about 1 million jobs in the US economy. So can we just stop saying this please? :)
Funny that John Key, Minister for the GCSB and SIS acts as though he knows nothing about it. I imagine that when the Panama Papers story broke, the first thing the GCSB, SIS, and even the IRD and Serious Fraud Office should have had alarm bells ringing loudly in their offices.
John Key and the Minister of Finance and the Treasury SHOULD have been on the phone to them IMMEDIATELY to ask "Is this true?", "What information can you find out about these Panama Paper claims?"
Equally, the state security and financial security agencies of NZ, should have been watching for, if not investigating, this type of activity in the past.
The fact that Key shrugs his shoulders suggests one, or more, of the following possible scenarios:
A) John Key just does not care about illegal international money-laundering in NZ despite international treaties covering its illegality
B) John Key is complicit, in some way (e.g. knows about it, AT LEAST)
C) NZ security agencies and the Serious Fraud Office do not care about illegal international money-laundering in NZ
D) NZ security agencies and Treasury officials are incompetent
E) NZ security agencies have been told to NOT INVESTIGATE or to not even LOOK for this type of money-laundering operation
F) The security agencies, the NZ Treasury and the Minister of Finance know, but are simply not briefing the Prime Minister.
In reply to Wayne Mapp, in the words of Sir Francis, "Well they would say that would'nt they".
So to comment.
An interesting aspect of this issue is how the zeitgeist has changed.
Yes we now live in an internet age where hacks can badly expose anybody, so we need lots of beltway spin from the likes of Wayne.
For thirty years offshore trusts where neither the settlor or the beneficiaries are New Zealand residents have been a feature of our tax and financial system. For virtually all this time they have not attracted hardly any comment. In fact they were extolled as a good feature of our system by both Labour and National governments.
Hardly relevant, both major parties followed the neo liberal consensus, see Pat at 12.23
But the last few years has seen OECD nations much more concerned about tax evasion, so what was once unremarkable now has quite different connotations. Especially when coupled with inequality issues.
With the proverbial hitting the fan in 2008, and the taxpayers of the world being held hostage by the "too big to fail" banks who actually made money out of being bailed out....then the Occupy Movement, followed by the current financial crisis....yes, tax bodies see shrinking revenue. Given that the massive shift away from paying tax benefited the rich and the former middle classes getting poorer and the rest of us being cash strapped, well there is a depleted tax base. Of course OECD nations became more concerned, but did they do anything? I suggest not, it was not in the interests of the ruling elites.
I suspect that it is this change in the public mood that has caught the govt a bit flat footed, though I personally think Grant Robinson should also tone down his rhetoric, given Labour's involvement in establishing and maintaining the offshore trust system. But I guess that is politics. You take your chances when they come.
Again see point above and Pats link.
An interesting feature of the disclosures is how many Europeans, especially East Europeans use offshore trusts. Perhaps that is not surprising when you consider the relatively recent history of war, revolution and expropriation in those countries. Keeping the govt away from your assets is going to be much more of an issue for people who know they cannot really trust their govt. The tax issue may only be a part of the reason for these people to use offshore trusts. And the citizens of these countries seem unperturbed by it; perhaps they would all do the same if they could.
So point the finger away to an "enemy", the old Eastern bloc. Yes Wayne the Cold War is over, and the capitalism let loose their was truly "wild west". From what I read the President of Ukraine, one of the "useful fools" of US / EU foreign policy features large.
That this includes many if not most of Putin's cronies does not surprise me. Given that Putin has deliberately expropriated the assets of his political enemies, he and his supporters will fear the day when the boot is on the other foot.
Lets all blame Putin for what the Western governments have allowed and encouraged, he did not invent tax havens like Panama. Reading the reports it would appear so far that Putin is not named directly, some oligarchs maybe. I watch through the smokescreen, knowing that the real action is in our own Western countries. Camerons father is on the list, of course he never spoke to his son did he, so he is in the clear...but Vlad, by association, that's another case.
Continued to Wayne
Conversely in New Zealand, where we have a strong expectation of fundamental trust in our government, irrespective of who it is (forget the froth of daily politics in this since it is not relevant to this basic issue of trust) the use of offshore trusts by New Zealanders is seen as inherently dodgy. We may have many domestic trusts which seems not to raise very many concerns, but the use of for instance a Cook Islands trust or a Bahamas trust would be seen by most people as a device to avoid civic and social responsibility.
Wayne, I don't know who your proverbial "we" are. Most people shrug their shoulders, shake their heads and say, "Here we go again, but what can we do?" Trust in institutions amongst most people I know is at an all time low. What do you think Occupy was about? What do you think the impact of Wikileaks was? Then the GFC? Common Americans are flocking to Trump and Sanders because they don't trust the traditional power structure. Corbyn is now reported to be polling higher than Cameron. Who are the "we".
I am really pleased you post your comments here, because, whilst I think you are being genuinely honest, and you tell it as you see it, it betrays that we are in parallel realities depending on which side of the fence we sit. For example we might both agree that these devices are legal, we might not agree that they are morally ethical or socially just. Keep posting as it gives the rest of us a true glimpse into the mind of a member of the privileged class.
Nick,
I would have thought it pretty obvious from my post that I think a better disclosure regime for offshore trusts is required. The final part of my post was all about how most New Zealanders (including myself) think that a New Zealander having an offshore trust in a tax haven is a bit dodgy.
On the issue of trust in govt, you have primarily used US examples. David Farrar did an excellent post recently where he noted (based on consistent poll data) that for the last 15 years most people in the US think their country is going in the wrong direction, whereas in NZ most people think that NZ has been going in the right direction. That explains the Sanders/Trump phenomena, which is not present in NZ, tav least not in the way it is in the US. When Mana /Kim Dotcom tried to latch on to the same mood in NZ they got around 1% support.
Now I do realize that TPP has energized many on the Left, though in many respects it seems to reflect the historic distrust that the activist Left has of anything associated with the US. In that regard the fact the TPP was being promoted by Obama was irrelevant, the left attitude would have been the same if it had been promoted by Bush, even though under Obama there is far more in the TPP on labour standards and environment issues than there ever would have been with Bush..
But coming back the right direction/wrong direction, by any reckoning the support of the Labour govt from 1999 to say 2007and now National from 2008 to the present have been at high levels. That is a reflection of most people thinking our country is doing quite well, irrespective of which party is in power..
We simply do not have the same level of angst that is bedeviling the US and Europe.
We simply do not have the same level of angst that is bedeviling the US and Europe.
........
So how come only 8% trust politicians (9% media)?
According to Asian Foundation 48% think immigration from Asia will have a "position" impact (Colmar "Brumpton").
One of the reasons we are "going in the right direction" is because Labour and the Greens are not an alternative? Academics and journalists have caste anti immigration parties as far right and extremist rather than moderate and sensible.
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