End of the Banking System – Frederic Sautet

Mine is not about to become another cut and paste blog, however, given our banking laws are to be the same as Cyprus as regards the ultimate destruction of a depositor’s property, and remembering many of my New Zealand taxation and legal blog entries have been precisely about how the state has usurped the rule of law in New Zealand, following the lead of the Western police-states growing under Big Brother Surveillance State Keynesian socialism, with irresponsible, profligate politicians incompetently bumbling us all down the road to our serfdom by not understanding the (unintended)consequences of destroying the free market mechanism and imposing their foolish, petty selves oafishly between the needs and desires of the individuals in society, and the voluntary resolution of those needs – the current Tiwai Point fiasco another case in point of National’s bumbling – this becomes an important statement of truth by Sautet. This is what destruction of the free in free markets leads to; this is the implosion; read the full article here, with this short quotation to whet your curiosity:

I cannot think of a faster way to completely destroy a banking system than to expropriate its depositors. This is the kind of policies one would expect from a banana republic, not from a political system that rests on the rule of law. But this is the point: the EU does not respect the principles upon which a free society is based. The more a government uses the tools of expropriation, the more it creates the conditions of its future demise. Big depositors will not come back to Cyprus once all this is over. And restricting capital flows, as it is the case now, worsens the situation in the long run. 

As many commentators have said, the Cyprus problem, like that of Italy, France, Greece, Portugal, and Spain is one of public finance. As the EU moved from a free trade zone to a political system after the ratification of the Maastricht Treaty in 1992, it also (among many other things) progressively collectivized the risks associated with public spending …

And before I'm accused of backing the crony capitalist fiat money system (that is, current banking), note Sautet's final sentence:

Ultimately, of course, governments should get out of money production, but that’s maybe for another century.

(Every place EU is used in this quotation, replace with New Zealand: unfortunately the sense still works.)

MSM Again: I Expect This of Granny Herald, Not NBR.

Look at these two headlines from Friday and Saturday:

NBR:

Apple’s NZ unit pays 0.4% tax on 2012 sales of $500m

From New Zealand Herald, and to give NBR their dues, this a lot more duplicitous by dropping the reference to sales as a denominator:

Apple's NZ unit coughs up 0.4% tax

Both pieces by Kristen Paterson; this is how Kristen starts the Herald piece:

Apple's New Zealand division made sales of $571 million last year but paid only 0.4 per cent of that in tax.

Labour's Revenue spokesman David Cunliffe said that's akin to paying nothing at all, and letting a corporation get off "scott free" is something New Zealand taxpayers shouldn't have to stomach.

Shock horror, call in the IRD Storm Troopers, this global company is not paying its fair share of tax in New Zealand. And don’t worry about how the innovation of firms such as this have increased our quality of living far more than the voracious, bottomless stomachs of out-of-control government, David.

It’s a hackneyed story by now; I’ve covered it before:

Amazon is Our Hero, Not the Villain in the Piece.

 Labour’s David Clark Declares War on the Consumer.

However, this time I’m not pointing out differences of philosophy in the reporting: as I implied in reference to the Herald’s headline, there’s something much more slippery happening here.

The 0.4% tax rate Kirsten refers to is tax liability accrued in the financial statements as a percentage of total sales.

Huh? Of sales?

Businesses, be they sole traders, partnerships, special partnerships, LTC’s, QC’s, companies, trusts don’t pay tax on sales; they pay tax on net profit; that's sales, less expenses incurred to make those sales.

To prove the point I’m shining the light of freedom on in this post, I will employ a simple example. Kirsten wants the IRD, presumably – I can't think what the agenda is otherwise - to crush Apple, the big bad foreign corp only paying 0.4% tax on sales; but let’s look at a home grown firm, the current market darling, Xero.

Over 2012 Xero reported sales of $19.3 million, however, hold onto your seats, while paying zero (note the z) tax. That’s 0.00% tax on $19.3 million turnover. What a shocker.

Also, off Fletcher Building’s last financial statements, the similar head line is, shock, horror: ‘NZ’s Fletcher Building Coughs Up Only 0.37% tax – Less than Apple’. In fact let’s rewrite Kirsten’s opening paragraph:

New Zealand firm Fletcher Building made sales of $8.9 billion last year but paid only 0.37 per cent of that in tax.

Does this mean the directors of Fletcher Building and Rod Drury from Xero should now be frog marched for their compulsory interrogation in IRD’s room 101? When you get that letter, there’s no saying no, you know - it’s not the free society. Should IRD be demanding all these directors’ personal bank statements from their banks, unknown to them, then sending in the storm troopers to dismantle their companies?

No, it doesn’t mean this. Because returning just to the former, all this means is Xero, after expenses which were greater than its sales, because its aggressively trying to grow its customer base, generated a loss, and it's only bottom line taxable profit (or tax loss) that is of relevance for calculating tax liability.

So returning to Apple NZ’s 0.4% tax rate as a percentage of sales, what does that tell the reader?

Nothing. It’s an entirely pointless, out of context figure, generated into the headline only for its sensationalist value in appealing to the typical Kiwi’s Luddite xenophobic anti-capitalist prejudice. Chris Keall on the NBR thread points out, rightly, that when you burrow down into the piece there are figures which would seem to highlight inconsistencies with Apple’s tax liability, although in response to that there is, apart from my philosophical defence of Apple in the links above, another commenter who makes the equally valid point that it may well be appropriate Apple uses transfer pricing to take profits back to where it earns its intellectual property, leaving a small profit in NZ representing its sales here of merely low margin product. But all that is beside the point, which is the spurious use of a headline figure designed to play on the prejudice of New Zealand's beef-witted. And while I would have expected Herald to pick up the piece and run with that by-line, I’m disappointed in NBR: I don’t pay my online sub for shoddiness and beat ups against innovative businesses like this, leave that to the rest of the media in New Zealand; in a drought of intelligent press, you were the single oasis of sense, and dare I say it, morality. Some of us are over the emoting, advocacy journalism of the sort that utilises such a sham for a headline.

Related Fourth Estate Posts:

Role of a Free Press: TV 3’s 3rd Degree and Syria.

The Connecticut Shooting

Feeling Our Way to the Police State

Lock Up Granny, The Keynesians Are Coming.

Good FT piece praising higher inflation as a tool to redistribute wealth from old rich savers in Japan to young/poor ft.com/intl/cms/s/0/6…
— bernardchickey (@bernardchickey) March 22, 2013

@bernardchickey So why would I bother saving, Bernard? Seems no point to me. May as well spend b4 inflation gets me, then retire on state.
— Mark Hubbard (@MarkHubbard33) March 22, 2013

@markhubbard33 @bernardchickey Those old savers worked all their lives; young done nothing yet. You advocate straight out theft.
— Mark Hubbard (@MarkHubbard33) March 22, 2013

@markhubbard33 I'm not advocating here yet. A particularly Japanese issue. Key is making sure young have jobs. Can't abandon a generation
— bernardchickey (@bernardchickey) March 22, 2013

@bernardchickey Shouldn't feed granny to them either.
— Mark Hubbard (@MarkHubbard33) March 22, 2013

The best way to help the next generation is for the government to get out of their way, not putting up road blocks like the minimum youth wage; and even before that, not creating a society where 20% of them are now born into a parent’s welfare benefit. Welfare was never meant for that. Micky Savage would be turning in his grave.

And by the way, Bernard, I noted the use of the word 'yet' in your second post: hardly comforting.

Spot What Is Missing in Christchurch Rebuild – And People’s Heads.

Front page of today’s Press:

‘Landowners in proposed central Christchurch retail precincts have been warned to speed up negotiations or face compulsory acquisition …’

Roger Sutton – CERA

What’s missing? Answer: Freedom; based, as freedom is, on property rights. Not a skerrick left. I'm assuming the reference to 'landowners' is purely ironic, for what sort of 'negotiations' are possible with a state that can and will compulsorily take your property anyway. And how did it come to farcical this? Easy to see; from Twitter:

@markhubbard33 It's not your wealth that's being redistributed but that of the community.
— Draco T Bastard (@DracoTBastard) March 22, 2013

To which I can best end with my reply:

@dracotbastard You rotten slime. Crawl back under your rock, Mr Stalin. In the free West, there won't be a worse post than you just did.
— Mark Hubbard (@MarkHubbard33) March 22, 2013

Communist, Fascist, we’re some shade of either or both, whatever, no free society to be found in New Zealand; not anymore, it just daily stuns me how far we’re moved away from it down our road to serfdom.


Update 1:

Note how @dracotbastard, who has above just recommended the complete nationalisation of all private property in New Zealand, is yet another anonymous poster, like this hypocrite and her hate site, and yet another member of the Left whom, when the bright white light of Freedom is momentarily shone into the void of their darkness, has blocked me on Twitter. There's quite a list now.