Rorting the system a multi-sport
Green Party co-leader far from alone in avoiding the tax net
You have got to hand it to the Material Girl for ‘fessing up’ to taking part in the national sport of rorting the system.
When Metiria Turei confessed to taking on flatties to eke out her domestic purpose benefit payments when she was a young law student, all hell broke loose.
But thousands of tradies, cleaners, lawn mowers, street market vege sellers, dairy and chipperie owners — among others — each year avoid the tax fiend through doing cash jobs.
Then there are the offshoreowned companies — many of them multinational blue chips — who armed with the finest advice that “revenue through avoided taxes” can buy, shuffle assets around the globe and use offshore trusts to ensure their contribution to the NZ company tax take is minimal.
Not to mention the many who hide assets and business profits through family trusts; accumulate wealth through long-term property investments which are not subject to capital gains taxes and do the same with farms.
Then there are organisations with charitable structures which enable them to funnel cash to charities which would be better off in the tax pot. Maori corporates — such as the major iwi corporations — which pay much less than the standard corporate tax rate.
Much of this is legal. The cash jobs are not.
But in my view it all — including with Turei — comes down to rorting the system.
The Greens co-leader could quickly put an end to her own personal controversy by marching up to the nearest Winz office and opening settlement negotiations. Instead she is stringing out the publicity by saying she will deal with it if the authorities investigate. This enables her to prove her political point that beneficiaries need a great deal more help to get out of the soup.
But her flatties won’t be thanking her.
Like the many New Zealanders who have happily paid for “cash jobs” to have their houses painted or cleaned and their lawns mown; or watched a proprietor fail to ring the till when presented with cash for dairy items or fish and chips, Turei’s flatmates would have been well aware what she was up to.
To avoid fingering them in any trumped up investigation, the politician would be wise to just write a cheque.
There’s been a great deal of pontificating from the commentariat over Turei’s shocking indulgence in “benefit fraud”.
Her credentials to lead the Green Party have been questioned. She is said to have “condoned fraud” through not declaring her additional income while taking a benefit.
This may indeed be true. But I would suggest she is not alone.
Deputy Prime Minister Paula Bennett — who also got her tertiary education while “on the DPB” — has not put the knife in.
Bennett has been judicious in her choice of words when questioned if she had ever transgressed the Winz rulebook.
To put Turei’s crime in perspective, Inland Revenue estimate the “hidden economy” — this used to be pejoratively known as the “black economy” — could be worth $6 billion to $9b in lost taxes each year.
That’s considerably more than the couple of billion dollars outstanding through family maintenance owed to the welfare authorities by errant parents (mainly men) who have skipped off without contributing to their children’s upkeep. Or the amount owed by students who have skipped the country to avoid paying off their loans.
The former has sparked Revenue Minister Judith Collins to look into using some draconian tools which include accessing bank accounts and busting through trust walls to ensure people pay their fair share.
Accountants CooperAitken said: “The hidden economy, amongst other things, includes undeclared income and paying cash wages. Several methods are adopted by the IRD to identify individuals who evade their tax obligations including; better targeting of specific industries that may be taking part in the hidden economy; improving the anonymous information service, making it easier for people to report those they suspect are cheating the tax system; and visiting people who are engaging in on-line trading but not declaring their income.”
If Turei’s confession sparks a broader conversation on just who is really rorting the system and what to do about it — that would be a step in the right direction.
In the meantime have an open amnesty so other Kiwis can make peace with their consciences and pay back what is not their due.
Fat chance that many Kiwis will do that — the national sport is too entrenched.