Labour's Facebook ban threat loony, but it's on the right track

DAVE ARMSTRONG
Last updated 09:19 03/02/2014

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Leadership battle may blind Labour Labour leadership victory may prove pyrrhic Labour steels itself for ugly run-off David Cunliffe's slow-motion train wreck For Labour, leadership is everything Cunliffe's exit is assured - but by which route? Labour crisis falling into farce Lots left to be desired A lame duck ripe for the plucking Cunliffe battles Labour caucus

OPINION: I reckon John Key is dead right in his belief that this year's election will be a close one.

Every time the Opposition pulls slightly ahead in the polls, it quickly shoots itself in the foot and it's back to level pegging.

The delivery of David Cunliffe's baby bonus appeared to start well, with few internal complications and the main points explained with surgical precision.

However, many of his own supporters were probably outraged that a couple earning $150,000 a year would qualify for the payment.

Then, in a moment that would make Homer Simpson proud, D'oh-vid Cunliffe forgot to tell us that roughly half the parents he said would qualify for the baby bonus wouldn't be eligible, as they would be on paid parental leave. At first Mr Cunliffe blamed a staffer for the error, but after policy midwives were called, Mr Cunliffe finally manned up and took responsibility.

Meanwhile, Labour's revenue spokesman, David Clark, a bright young star under David Shearer but a supernova under Mr Cunliffe, decided that if Facebook didn't pay its fair share of tax (it paid $28,000 tax in 2012 - less than is paid by a demoted backbench Labour MP), a "back pocket" threat would be to shut them down.

Mr Clark's Facebook facepalm quickly had the libertarians up in arms - avoid all the tax you like but banning internet sites only happens in despotic Third World regimes. New Zealand does far more civilised things like helicopter raids on residents we think may have breached US piracy laws.

Mr Clark was quickly defriended by his colleagues, who doubted Labour would take such draconian action. His relationship status within Labour quickly dropped from "liked" Dunedin MP to "single".

Mr Key found Mr Clark's comments "interesting" and Bill English called them "nuts". However, the finance minister conceded that multinational companies like Facebook should "pay their fair share".

At present many multinationals don't. They avoid tax by various legal ways, including creating subsidiaries in low-tax places like the Cayman Islands. It is these subsidiaries that receive most of the company's revenue, on which they pay negligible tax. The company's expenses are channelled to relatively high-tax countries like New Zealand, where a loss is made.

Though Mr English and his colleagues have spent millions of taxpayer dollars cracking down on welfare cheats and trying to hock off our deeply unattractive state assets, the finance minister's shoulder-shrugging response when asked how we actually get multinationals to pay their share of tax seems to be "it's complicated". What a pity he's only been finance minister for half a decade so hasn't had time to do anything much about it.

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Actually, it's you and me, as we pay increased user charges and GST, who subsidise the Facebooks of this world. That's the same Facebook that bans pictures of breastfeeding mothers yet faces no legal problems hosting Roast Busters.

Though Mr Clark's comments verged on the loony, I agree with him that our government should be doing far more to ensure that wealthy companies like Facebook pay far more than a piddling 3 per cent in tax.

When people complain about "dole bludgers", they often mention "welfarist" culture - that some people live in an environment where it's considered perfectly okay to rip off the welfare system.

It seems that others of us live in a "tax avoidance" culture. Go for a cruise on a luxury yacht with some rich business types and loudly detail how you committed domestic violence or cruelty to an animal and you will be rightly ostracised.

But tell everyone how much tax you managed to legally avoid in the last financial year and it's likely you'll be greeted with laughter and slaps on the back.

Banning Facebook is no answer, but let's hope once the blood makes its way from Mr Clark's head, he and his colleagues work out more sensible ways for multinational companies to pay their fair share of tax.

A strict no-nonsense tax policy that treated everyone equally, including Facebook, could be a winner, not only with the vast majority who must pay GST on everything they buy, but with good honest New Zealand taxpaying businesses as well.

- The Dominion Post

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