Tax-dodging tech giants: Time to stop rewarding bad behaviour

Writing at the New Zealand Herald Matt Nippert says Top multinationals pay almost no tax in New Zealand.

A major Herald investigation has found the 20 multinational companies most aggressive in shifting profits out of New Zealand overall paid virtually no income tax, despite recording nearly $10 billion in annual sales to Kiwi consumers.

The analysis of financial information of more than 100 multinational corporations and their New Zealand subsidiaries showed that, had the New Zealand branches of these 20 firms reported profits at the same healthy rate as their parents, their combined income tax bill would have been nearly $490 million.

It's legal but...

Big companies not paying tax may be legal, it isn’t moral. They shuffle profits to countries with low taxes so they can avoid paying for the taxpayer-funded infrastructure and social spending that made them rich in the first place.

Two tax avoiding tech giants Facebook and Google grew wealthy on the back of the internet.

It was originally paid for by taxpayers in countries like the USA and the UK. The internet wouldn’t exist without taxpayers, nor would Google or Facebook.

Apple grew into one of the world’s largest businesses on the back of the iPhone.

Yet for much of its history, Apple mainly sold computers. A large number of those sales were to schools. It depended on government funded education to keep it afloat during the lean years.

See: Don Christie: global IT giants all take, no give.

Taxes helped these businesses grow

Without taxes, there would be no Facebook, Google or Apple.

Large countries like the USA, UK and even medium-size ones like Australia have moved to close the loopholes allowing multinationals to avoid taxes. New Zealand has less room for manoeuvre.

In the long-term our best chance of dealing with the problem is by taking part in international initiatives.

What the government can do

In the meantime, there is something we can do. We could insist government purchasers only buy from the companies who pay their fair share of tax.

Sure, fair share is a debatable and nebulous term. The less than one percent paid by some companies on Nippert’s list is not fair.

Not buying from tax avoiders would mean no more government purchased iPhones, no government Google Apps accounts, no government advertisements on Facebook.

At least not until they pay up.

Not taking this approach amounts to rewarding bad behaviour.