Labour's finance spokesperson Grant Robertson is calling for John Key to "take a firm stand and demand a law change" following the prime minister admitting small taxes on multinational companies is unfair.
"Multinationals should pay their fair share of tax – not just about what's legally right but also what's ethically right," said Mr Key on The Nation yesterday.
"To fix that situation I think you need all of the countries working together."
The Government is relying on the OECD to do that, but if that doesn't work, Mr Key says he'd consider a law change.
"If we couldn't get a resolution through the OECD, who are working on it through all of their tax experts for all the countries around the world, then we wouldn't rule out doing something unilaterally, but we'd have to be sure it worked."
However, Mr Robertson says, "If John Key is not prepared to act on his view that multinationals not paying tax is ethically wrong, but not legally wrong, his moral compass has gone missing.
"If it's not illegal and just immoral then surely a law change would enable a level playing field where multinational companies contribute accordingly. People who go to work every day and do the right thing paying their taxes need to know that the Government is on their side ensuring that big companies do the same."
Mr Robertson says New Zealand needs to follow the lead of Australia and the UK, and undertake a comprehensive review of tax avoidance.
"From that we need a law that ensures that if a company is in New Zealand and earning revenue, then they have to pay the appropriate corporate tax rate," he says.