Shewan recommendations adopted

July 14th, 2016 at 11:00 am by David Farrar

The Government announced:

The Government is acting on all recommendations from the Shewan Inquiry into foreign trust disclosure rules, Finance Minister Bill English and Revenue Minister Michael Woodhouse announced today.

The Inquiry made a number of recommendations which propose improvements to registration and disclosure of information, anti-money laundering rules and increased information sharing between government agencies.

“The Government has always been open to making improvements to New Zealand’s already strong tax settings if that was warranted,” Mr English says.

“The Shewan Inquiry’s recommendations are sensible and well-reasoned and by acting on all of them, we will ensure that our foreign trust disclosure rules are strengthened and New Zealand’s reputation is protected.

“The changes to the foreign trust rules are a matter that the Government intends to move quickly on.

“The Government intends to introduce legislation to require a register that is searchable by Internal Affairs and the Police, and annual disclosure requirements in the coming months.”

So the Government is implementing Shewan’s recommendations while Andrew Little has still not apologised to him for slandering him.

Gower says Little should apologise to Shewan

June 30th, 2016 at 10:00 am by David Farrar

Patrick Gower writes:

Andrew Little should apologise to tax expert John Shewan for treating him with utter contempt and total disrespect.

Mr Little has been caught out big time — and it serves him right.

Mr Little got things wrong about Mr Shewan and has to put them right.

So Mr Little issued a retraction — at 5:17pm on Saturday, June 18 — two hours and 18 minutes before kick-off of the Wellington Test.

This is so cynical it is sad. Everybody knows that is the absolutely dead time in a media cycle when it would get the least attention. It is cunning and awful and rude and Mr Little’s actions show why people distrust politicians.

Now things have bounced back on Mr Little and his own credibility is being called into question — and it serves him right.

A lot of this is arcane and complex but it is important because Mr Little is auditioning to be Prime Minister. His actions and his words are important.

Mr Little yesterday repeatedly said that Mr Shewan did not ask him for an apology about incorrect statements made about him.

So then Mr Shewan pulled out a letter to Mr Little that said: “I now request the statement I sent to you yesterday be issued with the following additions: ‘I apologise to Mr Shewan for any embarrassment I have caused him through my statements’.”

Sadly for Mr Little, it doesn’t get much clearer than that. Contrary to his public claims, Mr Shewan asked for an apology.

 

Mr Shewan has produced an excellent report,. Labour has been quoting it in Parliament and saying it is good. But previously Little was accusing Shewan of being involved in helping the Bahamas stay a tax haven. He admits he was totally wrong on this, but won’t apologise to Shewan for the smear of his reputation.

Shewan says Little is lying

June 29th, 2016 at 10:00 am by David Farrar

The Herald reports:

Tax expert John Shewan says that claims by Andrew Little that he did not seek an apology from the Labour leader are misleading.

“The statement that I never asked for an apology is completely incorrect,” Mr Shewan told the Herald today.

Mr Little told reporters this morning that he did not apologise to Mr Shewan, a former PwC chairman, over incorrect statements he made about his background in April because he was never asked to.

“I wasn’t asked to provide an apology. I was asked to provide his assurance that the media report I relied on was wrong.”

He added: “[Mr Shewan] explicitly said ‘I don’t need you to apologise, I want a correction of a statement’, and that’s what I’ve done.” …

But when Mr Little failed to issue a retraction for nearly two months, he wrote back to Mr Little’s office on June 10 and asked for the retraction to be expanded to include an apology.

“I specifically asked for an apology, that being because of the prolonged delay in getting the [comments corrected],” he said.

Mr Shewan said the Labour leader’s office rejected this request. He was also told that any further correspondence should be sent to Mr Little’s lawyer.

On the evening of June 18, a Saturday, Mr Little issued a statement retracting his comments, but stopped short of an apology.

Mr Shewan said he had been reluctant to take legal action while he was undertaking the inquiry into foreign trusts, which was publicly released yesterday.

But he was “dismayed” at Mr Little’s latest comments, and would not rule out further action.

“I’m not prepared to sit by and let him say anything more defamatory.

“I would prefer not to take any legal action and I think it is unlikely that I would. But I don’t just sit around and let people defame me. It’s just not on.”

Getting to be a bit of a trend here with the Hagaman defamation case also.

The Herald article includes the e-mail from Shewan to Little’s office which explicitly seeks an apology.

For Little to claim Shewan never asked for an apology means there are only really two possible options:

  1. Little’s office didn’t show Little the letter
  2. Little is lying

Shewan recommends greater disclosure for foreign trusts

June 27th, 2016 at 3:13 pm by David Farrar

John Shewan’s report is here. He outlines four options:

Option 1 Some increase in information required to be disclosed by foreign trusts (details of settlor and beneficiaries as listed in trust deed).

Option 2 Significant increase in information required to be disclosed (details of settlor, persons with effective control, non-resident trustees, beneficiaries, trustees, trust deed) coupled with an annual return, expanded application of the AML laws and a register of foreign trusts, searchable (but not by the public).

Option 3 As for 2, but foreign trust register is publicly available.

Option 4 Amend the foreign trust tax regime to repeal the exemption from tax on foreign source income.

Shewan recommends Option 2. His conclusions are:

The Inquiry concludes that the existing foreign trust disclosure rules are inadequate. The rules are not fit for purpose in the context of preserving New Zealand’s reputation as a country that cooperates with other jurisdictions to counter money laundering and aggressive tax practices.

The Inquiry considers that a significant increase in information disclosed when a foreign trust sets up, annual reporting and increased enforcement, will satisfactorily address the issues identified. Banning foreign trusts or removing the current tax exemption is not considered to be necessary or justified.

The full report is 136 pages long.

No doubt Andrew Little will still insist that all foreign trusts should be banned, as part of his party’s efforts to make up policy on the hoof.

Little retracts statement on Shewan

June 19th, 2016 at 12:00 pm by David Farrar

The Herald reports:

Labour leader Andrew Little has today backed down from comments that the man charged with investigating New Zealand’s offshore trusts industry had advised the Bahamas Government on protecting its financial sector from tax changes. …

On April 13, Mr Little alleged that Mr Shewan and Dr Brash had effectively advised the Bahamas – a country known for tax haven activity – on how to protect its offshore financial services industry and maintain its haven status.

Appointing him to lead an inquiry on New Zealand’s offshore trusts industry showed a lack of judgment, he said.

But today, in a short statement, Mr Little admitted that he was wrong.

“In April, I made statements concerning advice provided to the Bahamas government by John Shewan, the person appointed to review the disclosure rule concerning foreign trusts in New Zealand. Those statements were based on a report in a Bahamas newspaper,” he said.

“After meeting with Mr Shewan, I accept his explanation that while he advised the Bahamas government on tax matters he did not advise them on how to maintain their tax haven status.”

So two months later he announces on a weekend he was wrong and that he effectively incorrectly smeared Shewan.

I hope media give as much attention to his retraction as they did to his original comments.

Labour defaming Shewan

April 14th, 2016 at 10:00 am by David Farrar

Politik reports:

The appointment of John Shewan to investigate foreign trusts in New Zealand was always going to be controversial. Mr Shewan has a well deserved reputation as an establishment figure in Wellington. So it wasn’t surprising that Labour Leader Andrew Little alleged in Palriament yesterday that the Prime Minister had appointed John Shewan and Don Brash as advisors to the Bahamas Government when it introduced GST and “advised  that its financial services be zero-rated for value-added tax in order to protect the offshore services industry of that country”.

Mr Shewan vigroously denied this to Checkpoint  He said the trip  to the Bahamas had absolutely nothing to do with its status as a tax haven, and any suggestion of that was complete nonsense. We recommended that they modify their proposed regime significantly and simply follow New Zealand’s rules across the board.” Mr Shewan said they did recommend backing an existing exemption, as per international practice, that financial services be exempt from GST.

Dirty and nasty politics from Labour. John Shewan has advised both National and Labour Governments over the years. But now as they are desperate to try and make NZ look like Panama, Little defames Shewan under parliamentary privilege.

As Shewan said on Checkpoint (you can listen here) his work for the Bahamas had nothing to do with income tax or trusts. It was how to have a best practice GST, and the advice was basically to follow the NZ GST model (which is seen as one of the best in the world).

Shewan on Budgets

June 30th, 2012 at 11:00 am by David Farrar

John Shewan also talks about best and worst budgets:

One of the last big projects Shewan completed at PWC was to review New Zealand’s last 34 government Budgets.

The best finance ministers included Ruth Richardson, Michael Cullen and Bill English “all in their own way”, during different eras, Shewan said. Cullen, especially, was an “unsung hero” for holding government spending down early in his time as finance minister.

Bill Birch and Winston Peters were treasurers during a “non-reformist period of lost opportunities”.

Shewan said that one of the lessons of history was that, “You have to keep reforms going, otherwise you end up facing bitter medicine in the end.

Australia has managed that – continuous reform.

In the course of clearing up his office earlier this month, Shewan found a government booklet from 1981, from the height of the Muldoon era. There were 45 pages of incredibly generous tax incentives for business.

The bad old days, that some want to return to. They now call the loopholes and incentives “green jobs”.

“Without doubt” Muldoon was the worst finance minister of the past 34 years and did the most damage to the economy.

“But I don’t think he realised. I think he genuinely believed what he did would work,” Shewan said, even though Treasury and others advised against his decisions.

The damage was huge and took a long time to fix.

“I’m sad we haven’t learnt from those mistakes,” Shewan said, given the huge blowout in government spending between 2004 and 2008.

“That will be another era that will be judged extremely harshly when government spending grew 60 per cent. It takes a long time to recover from that,” he said.

In the early 2000s, the Clark government enjoyed huge Budget surpluses. “And in my view Michael Cullen did a good job in keeping a lid on spending between 1999 and 2005,” he said.

But in 2005 the government campaigned to bring in massive spending increases such as interest-free student loans and Working for Families, which led to significant “middle class welfare”.

“Often the worst policies are the ones announced on the hoof during an election campaign with no consultation,” Shewan said.

Interest free student loans are a prime example.

However Shewan gives credit to Cullen.

“Cullen is an unsung hero for being ruthless in stopping fiscal promiscuity in the early period of the Clark administration,” Shewan said.

“He was a clever and talented guy, for whom I had great respect though I crossed swords with him [on some issues].”

Cullen did salt money away in the New Zealand Superannuation Fund, when the Government was running big surpluses. …

Present finance minister Bill English had come in during an extraordinarily challenging period, when the economy was already heading for the rocks, even before the Global Financial Crisis hit, then the GFC did hit, followed by the Christchurch quake.

“He has achieved basically zero growth in government spending – that’s a huge achievement,” Shewan said.

It would be interesting to see his ratings for all the Budgets.

Shewan on taxes

June 30th, 2012 at 9:41 am by David Farrar

James Weir at Stuff reports:

New Zealand should move to a low-level land tax and cut personal tax rates, retiring PricewaterhouseCoopers chairman John Shewan says.

He also says the “elephant” of rising national superannuation costs means a rise in the GST rate to 17.5 per cent in coming years was “almost inevitable”.

Shewan had his last day as PwC chairman yesterday. PwC partner Jonathan Freeman has been elected the new chairman.

Shewan said a land tax rate should be low, perhaps 0.5 per cent of land value each year, and be assessed like a city council rate, with an offsetting fall in the personal tax rate of a few percentage points.

“I still think that is the right thing to do,” he said. That idea was rejected by the Government when proposed by the Tax Working Group, which Shewan was part of. “I regret that,” he said.

High taxes on personal incomes were the most damaging to the economy for growth and jobs. The most efficient taxes were those people could not avoid, such as tax on spending like GST or tax on land “because you can’t hide it”.

I agree with a land tax, so long as other taxes are reduced to compensate. Land tax is both unavoidable, but also encourages better economic use of land, unlike income taxes which actually discourage labour.

New Zealand’s tax system was a “complete wreck” in 1984, but was now one of the strongest and most robust in the world.

The basket cases of Europe, such as Greece, Italy, Spain and Portugal, shared a common thread of poor tax systems, with high levels of tax evasion and fraud. “They regard paying tax as voluntary,” he said.

In contrast, in New Zealand most felt they should pay their fair share of tax. Shewan said he was “very proud” of the tax system here.

It is one of the better ones around, so long as we resist the stupidities such as GST exemptions for fresh fruit and vegetables.

GST to 15% and top income tax to 45%

October 20th, 2008 at 8:57 am by David Farrar

Labour have left the economy with a projected decade of deficits and the latest economic news, coupled with Labour’s massive spending promises, could push the country into a structural deficit.

Top tax expert John Shewan has looked at what might have to be done to break out of Labour’s decade of deficits. He says GST might need to go from 12.5% to 15.0% and the top tax rate from 39% to 45%.

Is this what Labour has planned for its December mini-budget?