web analytics

IRD inland revenue department tax

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.

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.

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.

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.

Mike Murphy gets to the point for Quartz when he writes Google will strip Google+ for parts.

Stripping for parts is a delicious metaphor — the tech industry just can’t get away from car analogies.

The deal is this: Google will pull the Photos and Streams components from Google+ and set them up as two new products.

… and Google Hangouts?

There’s talk elsewhere the company will do the same for Hangouts. I’ve never had success with Hangouts but I know many readers love the application and prefer it to alternatives like Skype and FaceTime.

In some ways Google+ is a better social media tool to use than either Facebook or Twitter. It has a clean interface and offers greater flexibility.

I’ve found engagements with others can be more enlightening than the terse 140 character limit Twitter imposes. And there’s a higher signal to noise ratio than you’ll find on Facebook.

Google+ easy to read, navigate

Best of all, you can quickly read back through discussion threads. That can get tricky on Twitter when talks take off in multiple directions. And, of course, being Google means you can find things fast.

The problem is that Google+ never managed to get past the feeling that there’s tumbleweed blowing down empty streets.

Google says there are billions of accounts. That’s sort of true. Signing up for the service is more or less mandatory if you use other Google products or even an Android device.

Yet estimates say there are only a few million active users. That’s about two percent of Facebook’s active users and, maybe, five percent of Twitter’s.

Twitter grumble

There’s a joke that you go to Twitter to listen to people grumble, go to Linkedin to listen to people pretending to work hard, go to Facebook to watch people play and go to Google+ to see what Google employees are up to.

Google+ wasn’t Google’s first attempt at social media. You may remember Buzz and Wave. Both were awful, but they had fans. Google+ was a better experience, the basic idea and code were sound enough. It’s just that Google never seems to have got social media.

Commentators are writing Google+ obituaries. That may be premature, although one never knows with Google. This is a company that has no compunction about taking lame horses behind the stable for shotgun practice.

What is clear is that Google+ will change.

It’s hard not to sympathise with David Clark.  The Labour spokesperson for revenue wants Facebook to pay its fair share of tax in New Zealand.

Clark suggested banning or filtering the online giant could be one way of forcing Facebook to pay up.

Finance minister Bill English was quick to ridicule the idea. He describes a ban as “nuts”.

However, English shares Clark’s concern that Facebook doesn’t pay enough tax on the income it receives from New Zealand.

For the record the online giant paid just $28,000  in tax during 2012 on revenues of $790,000.

The world is waking up to the problem of large online corporations like Facebook avoiding local taxes in countries where they make money.

Google is famous for billing New Zealand advertising sales in low-tax Ireland and pushing the money through a string of countries in an arrangement known as the “double Irish Dutch sandwich”.

Other online companies have similar complex arrangements to avoid taxes.

This doesn’t just deny governments tax revenue, it also puts native companies in countries like New Zealand, Australia and the UK at a severe disadvantage when it comes to competing with rivals who have far lower tax overheads. This is potentially a bigger threat.

Realistically the only way this problem can be dealt with is at the global level. Even that will be difficult – the countries that win from these tax arrangements are in no hurry to stop whatever benefits they gain.

Good riddance to Google Wave.

I never understood what the fuss was about.

Wave may have been clever programming, but it didn’t do anything other applications already did better. Google has better tools for most Wave tasks.

It did instant messaging although Google already had tools that do the same job.

Wave did communications. Why bother when Gmail is so much better?

Wave was a collaboration tool. Who needs that when collaborating on Google Docs is so easy?

There was a social media twist to Wave, but Twitter, Facebook and Linkedin are all simpler to use and way more polished. Although they each come with problems.

Wave had a bad user interface and was difficult to use.

More importantly, it was difficult to understand what was going on and what one was supposed to do.

That said, Google Wave had some success.

Plaxo is part social media tool, part address book. It is useful for keeping contact names and addresses up-to-date.

Useful, but not as elegant or as handy as Linkedin. Not that I’d recommend LinkedIn to anyone.

Plaxo has a chequered history. In the early days it’s messages looked like spam and were annoying. The company climbed aboard the cluetrain and the unpleasant stuff stopped.

While Plaxo needs to make money – don’t we all? The company’s current approach may not work. It certainly doesn’t work for me.

Plaxo operates a so-called “Freemium” business model. The basic product is free, if you want to do more with the tools you have to pay. In theory it is a good business model and there are many cases where it works well.

I’ve recently come across three ways it aims to get money from me. I wouldn’t pay for any of these:

  1. Outlook sync. This was free, with a paid-for version allowing more features. Now sync is part of Plaxo Premium and costs US$60 a year – around a NZ$100.
  2. Then there’s Plaxo Pro available in three versions; Basic, Plus and Power. The Power version is a whopping US$250 a month and essentially provides you with a way to spam members. It includes Premium.
  3. Then there are e-cards, basically electronic birthday cards and similar stationary at a cost of US$20 a year.

You can forget the e-cards. Why would I ever want to pay US$20 to send them?

I’ve no wish to spam, this rules out the Pro version.

Which brings us to Plaxo Premium – paying for support is fair enough. Paying for back-up is reasonable. Paying to remove duplicates is a bit on the nose, but we’ll let that go.

I can’t use the sync to Windows Mobile and I used the Sync to Outlook when it was free and was not impressed.

Plaxo is an OK online address book although not as usesful as Facebook or Linkedin. It has around 15 million users – Linkedin has 43 million, mainly business oriented users, Facebook has 300 million.