Herald hypocrisy

January 13th, 2014 at 3:00 pm by David Farrar

The Herald editorial:

Many firms that practice probably do feel wretched about it. But they owe it to their shareholders to pay no more tax than their lawyers and accountants say they must, and they transfer the blame to the legislators who leave loopholes for them, or who set taxes too high or spend the revenue unwisely. With the company tax rate at 28 per cent in New Zealand, lower than the top personal income rate, it is hard to justify corporate avoidance here.

A NZX filing by APN which owns the Herald in 2013:

APN News & Media [ASX, NZX: APN] today announced an update in relation to a tax dispute following a report received today from the Adjudication Unit of the New Zealand Inland Revenue Department (‘’).

As stated in the Company’s 2011 Annual Report and the 2012 Preliminary Final Report lodged yesterday, the Company is involved in a dispute with the IRD regarding certain financing transactions.

The Company is satisfied that its treatment of the financing transactions is consistent with all relevant legislation and that no tax will become payable.

The dispute involves tax of NZ$48 million for the period up to 31 December 2012. The IRD is seeking to impose penalties of 50% of the tax in dispute and interest in addition to the tax claimed. In the event the Company is unsuccessful in the dispute the Company has tax losses available to offset any amount of tax payable to the extent of NZ$32 million.

These wouldn’t be financing transactions that resulted in a lower tax bill and hence was tax avoidance?

So does the Herald feel wretched about its own tax avoidance?

Will they apply their own moral standards to themselves and pay up the $48 million they owe the taxpayers of New Zealand, according to the IRD?

I look forward to both RNZ Mediawatch and the Herald own’s media column highlighting this flagrant case of total hypocrisy.

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32 Responses to “Herald hypocrisy”

  1. freedom101 (490 comments) says:

    No surprise really. The reporters are all Labour voters and the directors and shareholders and senior management are not socialists. Why don’t they employ non-socialist reporters? Because there aren’t any!

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  2. Keeping Stock (10,254 comments) says:

    The media is like the Labour and Green parties; the rules that apply to everybody else don’t apply to them. Well done for busting what promised to be the start of a campaign advocating for a policy that Labour will “just happen” to campaign on this year. As with the Corrections Association Con Air “scoop” that the Dom-Post had late last week, which has also been discredited, it would appear that the MSM has decided that it will set the election year agenda.

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  3. F E Smith (3,324 comments) says:

    I look forward to both RNZ Mediawatch and the Herald own’s media column highlighting this flagrant case of total hypocrisy.

    Well, there is a Tui’s billboard right there!

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  4. Jack5 (5,005 comments) says:

    Bit like TV3’s owner, Media Works.

    The Government gave a four-year, $43.3 million loan despite MediaWorks taking the Inland Revenue Department to court over a disputed tax bill. The IRD alleged the company owed $24.5 million in tax, interest and penalty payments from 2002 to 2004.

    Then MediaWorks went into receivership with debts of hundreds of millions. A restructuring deal includes the IRD writing off a large slice of owed tax.

    This doesn’t stop TV3, especially Campbell, constantly whingeing for more Government handouts and subsidies and payouts for this and that.

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  5. david (2,570 comments) says:

    I invited the Herald editorial author (via comments) to offer up how a caring and ethical company like The Herald (or whatever incorporated form it has) pays its tax, how much and what their sales were each year for the last 5.

    Strangely, that comment failed to make it past moderation – how convenient!!!

    Bunch of sanctimonious, hypocritical pricks the lot of them. Fish rot from the head down they say. The carcass is getting pretty putrid so it says it all about the leadership.

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  6. PaulL (6,013 comments) says:

    It’s the usual light weight analysis that ignores most of the complexity. They glibly say that corporates should pay their fair share of tax without articulating what such a thing is. The definition of fair share of tax is surely the share of tax that the law says you need to pay? Surely they’re not suggesting that anyone in their right mind would pay more tax than they were obliged to?

    Consider a company like McDonalds. They have franchises in NZ, but they also have global marketing, training, quality and accreditation functions. So you might say that they have $100M of revenue in NZ, and on that revenue they make $2M of profit. But maybe they also pay the parent in the US $15M for the services that are provided centrally. Is that reasonable or not? Is that fair or not? If the global entity is doing lots for you, maybe it is fair. Or maybe you’re deliberately using transfer pricing to avoid profits in NZ.

    Consider now a company like Google. They have almost no costs in NZ, all their costs are their servers, their developers etc etc. So imagine that they have sales of $100M in NZ, but all their costs are not in NZ. What’s their profit? What’s their fair share of tax? Do Google even make a profit? It’s not overly easy to work this stuff out, glibly declaring that they’re not paying their fair share of tax just shows ignorance.

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  7. Alan Wilkinson (1,865 comments) says:

    Herald opinion pieces have become a cesspit of putrefying crap and they have a long history of censoring all serious criticism.

    The few quality columnists are non-journalists like Hide and Jones who have actually done something with their lives.

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  8. Adolf Fiinkensein (2,871 comments) says:

    A glance at the last APN annual report is interesting.

    It would appear the NZ print media division, of which the Herald is the greater part, produced a gross profit of around $48mil but once the overheads were dealt in they made a loss of nearly 200mil.

    http://media.corporate-ir.net/media_files/IROL/14/144006/2012_Annual_Report.pdf

    Have a look at note 12, entitled ‘impairment of intangible assets.’ Is it possible that $548mil write down in the value of mastheads might have something to do with the Herald?

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  9. freedom101 (490 comments) says:

    If they are making those losses then they should close the paper down. They won’t, because the losses are ‘tax losses’ with profits being accrued in a different jurisdiction. Total rort, and utter hypocrisy. They need to be challenged to close the business down, to prove that they are in fact making those losses.

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  10. flipper (3,922 comments) says:

    Oh Dear…
    The Herald steps on its crank….yet again.

    I read the bullshit editorial and said to myself: ” The herald 2014 is ni different from the herald 20

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  11. Fentex (913 comments) says:

    Does expecting a newspapers reporting to align with it’s business interests (least DPF claims them hypocrites) mean DPF expects reporting to always align with their owners business interests?

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  12. Cato (1,095 comments) says:

    Or at least be willing to include their own owners in their laundry list of tax minimising villains. Or at least not to avoid making such criticism.

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  13. Adolf Fiinkensein (2,871 comments) says:

    freedom101 (408 comments)

    They won’t, because the losses are ‘tax losses’ with profits being accrued in a different jurisdiction.

    Perhaps you might examine the annual report and advise in which particular jurisdiction profits are being accrued?

    Look forward to hearing from you.

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  14. nickb (3,686 comments) says:

    I wouldn’t exactly call IRD changing their mind on a previous binding ruling retrospectively a shocking case of tax avoidance. But yes, it does smack of hypocrisy.

    Most of the calls for clamping down on international tax avoidance by people doing business here smacks of a complete ignorance of international commerce. It doesn’t seem like many people in public life are immune from this.

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  15. burt (8,174 comments) says:

    Jack5

    This doesn’t stop TV3, especially Campbell, constantly whingeing for more Government handouts and subsidies and payouts for this and that.

    Well of course, like the Journalists he’s a lefty with such a sense of entitlement to other people’s money he wouldn’t think for a moment to scrutinise his own actions or predicament.

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  16. CharlieBrown (986 comments) says:

    I consider it morally right to avoid as much tax as you can, but more so as a form of protest at the wasteful spending and bad government policies that enable generations of people to be dependent on the state. Even though I doubt these firms are doing it as a form of protest, it is good to know that someone is showing the absurdity of our complex tax system.

    The easiest way around this would be a simple flat consumption tax (where buying foreign currencies is considered a good thus gets taxed). Imagine the savings such a tax would have on the economy, enforcement costs would drop, accounts will be needed far less, and goodness knows the savings people would have on not having to dick around with all the tax rules.

    Unfortunately, our current crop of 120 odd socialists in parliament like to whip a dead horse and try and legislate around our ineffective tax system.

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  17. ross69 (3,652 comments) says:

    Once again DPF exaggerates. Todd McClay – he’s a National MP and Revenue Minister – agrees that companies are rorting the system and he isn’t happy about it. Who woulda thought?

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  18. isauld (3 comments) says:

    So, is the issue that the Herald editorial criticized the behavior of its parent company (albeit obliquely) or is it that it didn’t specifically refer to the dispute between its parent company and the IRD? If its the latter, is this really realistic? If its the former, isn’t this the sign of at least a certain level of journalistic independence (tempered by commercial reality).

    As for those who don’t see any problem with tax avoidance (or even see it as a social good), do you consider that companies (and their shareholders) and HNW individuals avoiding tax is equitable, or do you just not consider equity to be a goal that we should strive for as a society?

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  19. nickb (3,686 comments) says:

    isauld, you are a moron. Paul nails it really in his whole comment, but especially when he says:

    The definition of fair share of tax is surely the share of tax that the law says you need to pay? Surely they’re not suggesting that anyone in their right mind would pay more tax than they were obliged to?

    isauld, do you consider you have paid in tax this year a “fair share”? If not, will you be making a voluntary donation to the nation’s tax coffers?

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  20. Nostradamus (3,246 comments) says:

    Nickb:

    If not, will you be making a voluntary donation to the nation’s tax coffers?

    *Sound of crickets chirping in isauld’s garden*

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  21. F E Smith (3,324 comments) says:

    or do you just not consider equity to be a goal that we should strive for as a society?

    Define what you mean by ‘equity’.

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  22. Alan Wilkinson (1,865 comments) says:

    @isauld, striving for equality of income has been proven the quick route to poverty, misery and oppression. In contrast equality of opportunity linked to security of individual property and freedom to trade and contract within the rule of law has lifted populations out of poverty, misery and oppression.

    Also when companies minimise tax their shareholders pay more tax and more is reinvested into growth and future wealth for the community. When Governments take more tax they spend it on themselves and their supporters to consolidate and expand their powers over the population.

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  23. ross69 (3,652 comments) says:

    Apple pays less than 2% tax on its overseas profits. Surely nobody here would say that was fair…

    Alan, less tax means the likes of Rio Tinto, Warner Bros, etc receive fewer government handouts.

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  24. ross69 (3,652 comments) says:

    Consider now a company like Google. They have almost no costs in NZ, all their costs are their servers, their developers etc etc. So imagine that they have sales of $100M in NZ, but all their costs are not in NZ. What’s their profit? What’s their fair share of tax? Do Google even make a profit? It’s not overly easy to work this stuff out

    Actually Paul you’re talking nonsense. It’s easy to find out how much tax Google pays on its overseas profits. It’s about 2.4%. Being the reasonable person you are, I’m sure you’re aghast that Google pays so little tax.

    “The U.S. corporate income-tax rate is 35 percent. In the U.K., Google’s second-biggest market by revenue, it’s 28 percent.”

    http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html

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  25. ross69 (3,652 comments) says:

    http://www.bloomberg.com/news/2013-05-22/google-joins-apple-avoiding-taxes-with-stateless-income.html

    Apple avoided paying income taxes on $74 billion of profit during the past four years

    Sounds fair LOL.

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  26. Yoza (1,763 comments) says:

    isauld (3 comments) says:
    January 13th, 2014 at 10:42 pm

    … or do you just not consider equity to be a goal that we should strive for as a society?

    F E Smith (3,103 comments) says:
    January 13th, 2014 at 11:10 pm

    Define what you mean by ‘equity’.

    Thomas Jefferson

    …that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them…

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  27. UglyTruth (4,551 comments) says:

    Define what you mean by ‘equity’.

    Equity is about what is fair or even. Equity and law are different things.

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  28. Alan Wilkinson (1,865 comments) says:

    @ross69, why does it matter whether the tax is paid by the company or by the shareholders?

    And yes, the less money the Government has to hand out to voters or financial backers the better.

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  29. freethinker (688 comments) says:

    If you pass laws that are either open to different interpretation (Ambiguous) or fail to cover the intended purpose then it is just as wrong to complain that some interprete the law in a way you did not forsee as it would be to blame the legislators for passing laws that resulted in unintended consequences.

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  30. Dirty Rat (383 comments) says:

    Company losses are not tax losses e.g, impairments, in reference to a comment

    and the dispute hasnt been settled, so theres only half a story here

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  31. Miritu (29 comments) says:

    ross69 “Actually Paul you’re talking nonsense. It’s easy to find out how much tax Google pays on its overseas profits. It’s about 2.4%. Being the reasonable person you are, I’m sure you’re aghast that Google pays so little tax.”

    1. The tax saved will be far better off in the hands of an innovative company like Google, than being part of wasteful govt spending. Compare the benefits Google has created for most of the planet, to most govt spending
    2. If tax rates were not so high and complex there would be far less incentive for large companies to legitimately reduce their tax costs
    3 There seems to a large amount of misunderstanding re tax avoidance and evasion. Tax avoidance is structuring ones affairs within the law to pay less tax. Tax evasion involves breaking laws to pay less tax. Anyone who does not pay the maximum tax possible in their situation is ‘guilty’ of tax avoidance.

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  32. Dirty Rat (383 comments) says:

    My hunch is that the Thin Capitalisation rules have been applied to the carrying value of the NZ Assets…this would have triggered after the impairments, in which case the tax base of the assets (will be reflected in the deferred tax calculation) will be greater than the carrying value.

    I think APN will win this one..IMHO

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