Let’s talk about tax (and Michael Woodhouse).
Any reader of these august pages would be left in no doubt I have a bit of a professional crush on the outgoing Minister of Revenue.
Now all of that may seem seriously weird given that he is a member of a centre right government and I am an out lefty – social progressive please. Except that here’s the thing. So is he.
And before you protest Hon Mike let’s look at your record. Highlights include:
- Tightening up the foreign trust rules;
- Making foreign debt capital pay tax in a way they haven’t for decades;
- Releasing a discussion document to remove the too good to be true hybrid mismatches and
- Is thinking about considering finally taxing multinationals properly.
All stuff that would be more at home in a Green Party manifesto than the Business Growth Agenda. Now until this week I would have thought him a solid performer but not exactly a political operator. And its not like that is a bad thing. Chilled out entertainers get on my nerves.
Going through all the detail – coz that is what I do – here are the facts:
- In June Hon Bill and Hon Mike announced they were doing lots of multinational stuff including reviewing the interest limitation rules which is a big ticket way of not paying tax.
- A month ago Hon Mike announced there would be a discussion document on the whole diverted profits tax thing and interest deductions in February. I never covered it coz it looked quite sane and thought I’d wait for the detail.
- The reality of a discussion document in February is that while it might make a bill before the election. There is no way it can be passed into law by the time we go to the polls. So it will be become the next government’s problem to actually make it happen.
- Wednesday the Herald gets an advance copy of a cabinet paper probs also written a month ago. It says no to an actual diverted profits tax but proposes a bunch of stuff based on the work the OECD that should broadly have the same effect but without the drama of overriding our tax treaties.
- Oh and of course tax is inherently unilateral. Some how that seems to have got missed.
- The other thing that got missed is there was no detail on any moves to counter interest deductions. That is important but hard. And according to the June statement from both the boys was coming out this year. Waiting. Waiting.
Now from these little factoids Hon Mike got four articles in the Herald and me tomorrow in The Spinoff. Wow. Breathtaking. And – it is worth repeating – all on a subject announced at least a month ago that cannot become law in this term of government. And and he got a complete free pass on what he didn’t mention – interest deductions.
Sir. I have underestimated you. A solid performer AND a player.
And now you are leaving me and picking up ACC. But the real news is the change in your ranking from 19 to 9. This week has paid off for you.
Now I am not sure if I am going to find that Hon Judith is a closet lefty. But just in case my advice is:
- Carry on with the work on withholding taxes and particularly look at how vulnerable workers are treated and their risk of tax evasion;
- Interest deductions. Coz it is actually a key plank of work of OECD and is on a permanent foreshadow; and
- Keep an eye of those intermediaries and what they are doing with taxpayer data.
But otherwise good luck. I am pleased that Revenue is going to a senior Minister and none of this ‘outside cabinet’ nonsense. Michael Wood is going to have his work cut out for him marking you.