Wednesday, 12 August 2009

Bad banks: NZ people vs banks $38 million and rising

Green Party media release 11 August 2009 The struggling New Zealand taxpayer is tens of millions of dollars out of pocket due to the fight between the Inland Revenue Department and some of our largest banks, said Green Party Co-Leader Dr Russel Norman. Figures obtained by the Green Party show that as at 31 July 2009, the total cost for all Structured Finance cases against some of New Zealand’s largest banks is approximately $38,500,000. In July the High Court found in favour of the IRD in a court case involving the BNZ. The case revolved around a particular kind of transaction known as Structured Finance. The IRD considered these types of transactions to be tax avoidance. The ruling - subject to the latest appeal - meant the BNZ must pay at least $416 million in back taxes. “This is a David and Goliath fight,” said Dr Norman. “However unlike the recent movie championing alleged ‘Kiwi battler’ Dave Henderson’s fight against the IRD ‘We are here to Help’ – this time the IRD is David and the banks are Goliath. “The decision today by the BNZ to appeal a High Court decision that went against the bank will see the cost to the NZ taxpayer of fighting Structured Finance cases blow out even further,” said Dr Norman. “We know from our experience of New Zealand’s de-regulated financial market in the 80s that if banks can get away with paying less tax they will. “The problem then is who picks up the tab – and that is the greater New Zealand public. At present the Government have set up a working group to study tax – and suggestions coming from this group are that GST should be raised to 15 percent.” The Tax Working Group announced by Finance Minister Bill English in May includes Business Roundtable chairperson Rob McLeod. Earlier this year Mr McLeod gave evidence on behalf of the BNZ in the High Court in his capacity as a tax expert. “Surely when picking a group to look at the New Zealand tax system we should be casting the net further than ‘tax experts’ who give evidence in court cases on behalf of banks engaged in fighting our own IRD,” said Dr Norman.

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