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Pressure mounts for multi-nationals to pay more tax

Friday 7 Dec 2012 6:06 p.m.

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Labour's putting the pressure on multi-nationals to pay more tax in New Zealand and it wants the Government to turn up the heat.

It comes as Starbucks in the United Kingdom volunteers to pay a large tax donation to avoid a customer boycott.

The coffee company has decided to give $40 million to the British Government over the next two years regardless of its profits, that said, it hasn't paid any tax there for the last three years.

“Listening to our customers over the last six or seven weeks it's very clear that they think that we can and should do more,” the company’s UK managing director Kris Engskov said in statement.

Starbucks in New Zealand is a franchise operated by a publicly listed company so it pays tax here, but the pressure's going on other big players here like Facebook and Google.

“We always live in hope that we'll get more tax revenue but it's not one of those things that's easy to resolve,” says Prime Minister John Key.

Labour's continuing its attack on international companies with small tax bills here, and it's engaged an investment specialist to drill into Facebook's books.

“It looks like they're paying about one percent of the tax a local company is expected to pay,” says investment specialist Paul Winston.

He says based on Facebook's 2011 income its New Zealand earnings would be around $5 million so it should pay $1.4 million dollars in tax - a good deal more than the $14,000 it did pay.

“On the face of it there are real concerns and what we've got to do is get in behind what's going and make sure that the companies concerned aren't using their international structures to avoid their responsibilities,” says Revenue Minister Peter Dunne.

“Peter Dunne needs to step up to the plate and take some serious action here, he needs to understand the size of the problem and set about fixing it - if the tax base is not preserved, New Zealand’s in real strife,” says Labour revenue spokesman David Clark.

Mr Dunne is expecting an urgent report into what other countries are doing to clamp down on multi-nationals legally avoiding tax, but Labour says he needs to take action now - because time is money and there's already enough of that getting away.

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