A Labour Government will crack down on multinational companies that are dodging paying their fair share of tax, says Labour Leader Andrew Little.
“New Zealanders are missing out by hundreds of millions according to the IRD because multinational companies can hide their profits in complicated international schemes
“I have now written to the largest multinational companies, outlining Labour’s intention to make every company pay their fair share of tax like everybody else.
“The fact is, many multinationals are ducking their tax obligation and leaving it to Kiwi taxpayers to foot the bill. This is simply not fair. At a time when we need to urgently invest in hospitals, schools and housing, we need multinationals to make their fair contribution too.
“If multinationals aren’t prepared to pay their fair share, Labour will introduce a diverted profits tax, to enable New Zealand tax authorities to impose tax at a penalty rate if they believe that tax has been deliberately avoided.
“The experience in the United Kingdom has been positive, as companies such as Amazon are now booking their profits in the UK rather than in the tax haven Luxembourg.
“A diverted profits tax is an important tool to encourage multinationals to behave appropriately and pay their fair share of tax like every New Zealander who works for a living. They don’t have tricky accountants to help them dodge their obligations.
“Even on current tax settings, multinationals should be paying more. Labour is budgeting to collect an additional $600 million over three years. We will resource IRD’s investigations unit to do their job properly with an additional $30m injection each year.
“For nine years National has been going soft on multinationals. It’s a joke that the Government itself has estimated that multinationals are avoiding $300 million of tax per year, but is only budgeting on its policies recouping $100 million of that.
“With the right priorities and resource that Labour commits to, over three years New Zealand will be better off by $600 million more than what the Government has budgeted for.
“That’s $600 million this country desperately needs for more classrooms, better health and more social housing. It’s simply not acceptable that Kiwi kids are doing homework in the back of cars while multinational companies reap big profits but skirt around their obligations to pay tax.
“The Government’s performance on multinational tax is pathetic. It’s time for a fresh approach. Only a Labour-led Government will commit to everyone paying their fair share, to have hospitals, schools and housing funded properly,” says Andrew Little.