Labour’s pitiful call to ban foreign trusts
Stuff reports:
The Labour Party would ban foreign trusts to protect New Zealand’s reputation as the Panama Papers saga continues.
God, is Labour incapable of any form of considered decision making.
There could well be some changes needed to foreign trusts, and John Shewan is reporting back exactly on that.
But a trust is not some evil thing. Half the Labour caucus have a trust. Anyone who has a will has a form of trust. And having a foreign trust is not proof of wrong doing or tax evasion or even avoidance. To quote Roger Thompson:
Wealthy people in other countries have these same reasons for using trusts. There may also be a prevalence of kidnapping and blackmail in their country of residence, forced heirship laws (lack of freedom to choose who inherits their wealth when they die) and possibility of arbitrary state seizure of assets. The family and their businesses may be spread geographically and be subject to multiple laws in multiple countries. These are all situations where a trust can offer protection and flexibility.
However many countries do not have laws which enable the creation of trusts. Trusts are typically only found in countries that have adopted the English common law type systems such as UK, commonwealth countries and the USA.
For people in countries that do not have trusts they will need to consider trusts established in other countries that do have laws under which trusts can be created.
Any party that doesn’t make up policy based on is it a good soundbite would look at a proportionate response to the issue of whether some foreign trusts in NZ has been mis-used. Do we need changes to disclosure, to how they are taxed, to what level of details are provided. Do we need a central register? These are all legitimate and worthwhile questions.
But just coming out and saying all foreign trusts are bad and evil and must be banned from New Zealand is hysterical populism that just shows how desperate Labour is.
Banning something should be the last resort, not the first resort.