22 September 2004

Overseas Banks Need Stricter Controls

Rt Hon Winston Peters is questioning why it took the Minister of Finance, Treasury and the Inland Revenue Department so long to address a loophole that has allowed banks to avoid paying hundreds of millions of dollars worth of tax.

Mr Peters was responding to announcements made yesterday by Finance Minister Michael Cullen that the Government will introduce legislation to try and put a stop to overseas-owned banks avoiding tax payments.

“The Australian-owned banks have been allowed to finance their New Zealand operations almost exclusively from debt, offsetting income against debt servicing costs,” said Mr Peters.

“As a consequence, this country has seen a substantial portion of the wealth it generated here go straight into the pockets of overseas shareholders and investors. This is grossly unfair and needs to be rectified.

“Why has it taken Inland Revenue years of investigation to find out why bank taxes have stayed static while their profits have increased?

“The money lost is a result of sheer greed and deliberate tax avoidance, which shades into straight-out evasion.

“The scale of their operations was so large that it cut their actual tax rates by up to two thirds. We need to send these banks a clear message that what they have done is wrong and that they must pay their taxes like everyone else,” concluded Mr Peters.

ENDS

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