A terrible toss-up between siding with tax-trimming bankers or with brain-taxing wankers

Alf has never been a champion of the banks and the bankers who run them. He has been especially sour about the buggers since they pulled out of Eketahuna.

But the sadsack socialists at The Standard are more loathesome than bankers.

Today a bloke called Eddie is banging on about the big bucks owed to the IRD.

The banks, who tried to rip us off to the tune of $2.6 billion, have agreed to pay us $2.2 billion.

I don’t get it. We’ve spent tens of millions so far on court cases to get our money. We’ve won every case.

The judgments have been damning of the banks. So, why did the IRD agree to settle for 80% of what the banks owe us? Why are we giving the banks a $400 million gift? If we had run through the rest of the court process, we would have got more than $2.6 billion when you add penalty tax and court costs.

We might have lost the bloody case, ultimately, too, and it might have taken years and years and heaps of public money before that happened.

Alf draws attention to the information reported by the Herald today.

First, four big banks – Westpac, the BNZ, the ASB and ANZ-National – have admitted defeat in a long-running battle with the tax department and admitted liability for more than $2.2 billion in unpaid tax.

They have agreed to settle cases with Inland Revenue and repay more than $2 billion of the money in dispute.

The cases came about when the IRD took claims against the banks to the High Court.

The tax department said a complex mechanism known as “structured finance” that the banks were using to keep their tax bills down was tantamount to tax avoidance.

The cases have dragged on for five years, and the High Court and the Court of Appeal have found against the banks in hearings.

IRD Commissioner Robert Russell said the decision to pursue the cases was absolutely right, and it was a good result for New Zealand taxpayers.

“We believe this sends a strong signal to companies operating in New Zealand that, like all taxpayers, they must meet their obligations,” he said.

Solicitor-General David Collins, QC, is quoted as saying the settlement shows that the IRD and Crown Law have the resources and ability to pursue complex cross-border transactions.

Revenue Minister Peter Dunne is ballyhooing the the settlement as a “victory for legal process”.

The Inland Revenue Department’s pursuit of what it saw as a clear-cut case of tax avoidance, and its diligence on behalf of New Zealand taxpayers, had been rewarded, Mr Dunne said.

Westpac chief executive George Frazis explained that the banks entered these transactions “relying upon expert advice and rulings issued by the IRD in relation to a similar transaction.

“But we accept the court has ruled and that on balance, it is best that we accept this industry settlement and move on.”

ANZ-National Bank chief executive Jenny Fagg said her bank believed the transaction structures were appropriate in light of advice it had received, but those transactions now needed to be approached differently.

The BNZ said its Court of Appeal action had been cancelled after the agreement.

Who there and take note. More litigation was in the offing.

Eddie has sufficient wits about him to recognise that the deal struck means money flows into the IRD now. Not (maybe) in several years.

He bleats –

I have a sinking feeling that this is a political decision to get the cash in hand now for National’s objectives. There can be no doubt that a decision of such magnitude was approved by ministers.

Bill English, Peter Dunne, and John Key are going to have to answer for this $400 million dollar Christmas gift to the banks.

Oh yeah?

Listen hard, readers. Can you hear a clamour of demands for English, Dunne and Key to answer for a $400 million Christmas gift to the banks?

Nope. Alf can ‘t hear it either.

One Response to A terrible toss-up between siding with tax-trimming bankers or with brain-taxing wankers

  1. Pique Oil says:

    Peter Dunne yet again proves his ignorance when he states it is a “victory for legal process”
    Legal process is totally dependent on the depth of the litigants pocket. In our case the oil co had deeper pockets to delay and stall any vague notion we may have had of justice.

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