For some, this was the year of Trump. For others, it was the year of celebrity death (RIP, Ziggy). But for me, 2016 has just been taxing. A deliberate effort to dig into the opaque world of corporate tax avoidance and the growing Tax Gap has seen 18 stories published so far this year. At around 15,000 words all up, this has been been the most sustained journalistic project of my career.
The series was first kicked off with package on the front page of the Herald on March 18. This included a front-page splash, outlining how 20 large multinationals with $10b in reported profits paid only a net $1.8m in income tax over the year. This was accompanied by a longer feature on the issue of transfer pricing, a visualisation showing how globally profitable companies reported barely breaking even in New Zealand, and a table showing profit margin differentials and the responses of of companies examined to questions about their reported results.
A pre-planned wave of stories followed, including a probe into the low levels of tax paid by MSD, the drug-maker who was then-lobbying government for $40m to provide their expensive melanoma treatment Keytruda, a feature on how the issue of tax fairness had gained momentum on the back of the series, an investigation into how Facebook and Google booked all their New Zealand revenues in low-tax jurisdictions like Ireland and Singapore, and the revelation from Pfizer accounts the drug-making paid only $59,000 in tax while sending $52.5m offshore.
But wait, there's more: I then began looking at government policy on the issue, including how Inland Revenue audits of large companies had dropped precipitously, and New Zealand's messy stop-start signing of an international tax-information-sharing agreement. We also discovered our tax authorities had been quietly waging "trench warfare" with technology companies over with a crackdown on their aggressive tax structuring.
Drilling down further, we looked at delays to implementing the OECD's recommendation of limiting how much companies can suppress profits through debt-loading, and then a deeper analysis of the issue that showed the 100 largest companies operating in New Zealand could be subject to $86m in extra tax under such a limit.
Throughout all this, the opinions of the public and policy-maker and even the business community appeared to shift. The Herald's Mood of the Boardroom survey found concerns were now registering amongst the country's chief executives, John Key took the opportunity at APEC to corner Mark Zuckerberg about tax, professional tax advisers conceded they were losing the public debate, and the Commissioner of Inland Revenue took the unusual step of needling large corporates over their need to better explain to the public their tax arrangements.
Thanks for reading. But please don't stop: There's at least one more story to come...
ADDENDUM, December 13
And, late in the year, the government finally reacted. In a front page story we outlined how cabinet had conducted an about-face on the issue and was now proposing a unilateral suite of measures to staunch the leaks of corporate tax abroad. An accompanying editorial hailed the move as a step in the right direction to restore public confidence in the tax system.