Tag Archives: cheating

A culture of tax evasion.

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I do not understand what the fuss is all about when it comes to John Key and the revelations in the so-called “Panama Papers.” So what if he and other Kiwi high rollers shield their incomes and assets from the IRD in assorted trusts, funds, investments and even shell companies? Isn’t it an axiom of capitalism that, as Donald Trump has openly stated, you try to avoid as much tax payment as possible? Forget all this nonsense about “paying one’s fair share of taxes.” Only rubes and idealists do that. Everyone else tries to minimise their tax exposure and the rich pricks just do so on a grander and more elaborate scale.

I say this because the entire NZ economy is riddled with tax avoidance. One of the things that struck me after I moved to NZ is the amount of cash transactions that are done with the explicit intention of avoiding tax. Almost every single tradesperson I have dealt with in the course of my time here has proposed a cash transaction that avoids GST, but more importantly, avoids traceable electronic or paper (cheque) financial transfers. And the offers of non-GST cash transactions are done without shame or concern; it is just part of doing business for many people and everyone knows it and acts accordingly based on their own circumstances.

If what I have seen in the small business trade and service sector is any indication, then it is reasonable to expect that such attitudes percolate upwards into larger corporate structures and repositories of wealth. Since these are too big to hide in a cash-only parallel market, the next best thing is to engage in tax evasion and income-hiding schemes whose complexity is based upon the ability of the tax authorities to uncover them. The move to off-shore trusts and the like is simply a matter of keeping one or two steps ahead of the law and three steps ahead of enforcement mechanisms. If those in government choose to structure the financial regulatory regime in such a way that it keeps the holders of wealth five to ten steps ahead of the tax authorities then, well, you get what you vote for.

The difference between the approach of NZ high and low rollers when it comes to tax evasion is in scale, not kind.

This is one reason why I believe that the Transparency International rankings that have NZ listed among the top three least corrupt nations on earth are rubbish.  Add to that the nepotism, cronyism, shoulder-tapping, sinecure swapping and insider trading of everything from personal and professional favours to board directorships to stock shares, and the picture of NZ is far less rosy and far more, let us say, “pragmatic.”  I am particularly critical of the TI indexes because not only are they mostly based on reputational analysis (mostly offered by those who stand to gain from gaming the system), but because I participated in a TI survey of NZ’s intelligence and defense forces and saw my scores (and those of some others) pretty much discarded in favour of higher scores offered by insiders that led to an overall TI assessment that NZ has the highest standard of professional integrity amongst the defense and intelligence services in the Asia-Pacific.

Even so, I am one of those who are a bit idealistic when it comes to taxes. I understand the concept of public goods and therefore comprehend the rationale behind taxation. In NZ I pay tax more readily at a higher rate than I did in the US because, among other things, I am not paying to support a huge war machine that in turn serves the interests of a taxpayer subsidised military-industrial complex. As a small business owner I feel the burden of taxation more heavily and immediately than the corporate moguls that run the nation’s largest firms and whose bottom lines rest on minimising two things: their tax liabilities and their labour force wage bills. Yet I try to believe that I am contributing my small bit towards maintaining a high standard of public education, health and welfare that will lead to future generations of productive and happy citizens (although my experience with NZ academia suggests seriously diminishing returns in that sector, and I have serious doubts that overall heath, education and welfare outcomes are on the rise rather than in decline as a result of nearly a decade of National government public policies).

In spite of these misgivings, I remain a residual idealist and want to believe that my contributions, when taken collectively with those of others, matter for the present and future well-being of NZ. But I do not expect others to share the same hopelessly naive view of how the systems works, and I therefore do not begrudge them trying to dodge the taxman as much as possible. Because in a country where market-reifying ideologies reign supreme in virtually every facet of life, only a fool like me would think that paying taxes is anything but state-imposed theft levied on the productive in order to buy the acquiescence of the parasitical. I know this to be true because National, ACT and certain elements in Labour tell me so, and who am I to argue with those who dominate our economic, political and social narrative?

Not surprising.

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In 2007 a certain university lecturer, fed up with the managerial push to admit sub-standard and unqualified foreign students in pursuit of revenue, with the resultant pressure placed on lecturers to pass these students regardless of their performance, wrote a rude email to one such student who had failed to deliver a essay on time and who used a tired excuse of family death to justify the late submission. Although it was later proven that no evidence of any death was offered to any university authority and that there were mitigating factors surrounding the intemperate email, the lecturer was sacked for serious misconduct after selected contents of the email exchange with the student were made public by some of her associates (in violation of university confidentiality policy regarding emails).

The dismissal was later found to be unjustified and some monetary reparations were made, but after 25 years of involvement in university teaching and research in several countries (a rarity in NZ), the lecturer never worked in NZ academia again in spite of several applications for NZ university jobs and a very strong record of teaching, research, fellowships and community outreach, especially when compared to NZ peers.

I recount this sorry tale because the real crime committed by this lecturer was to challenge prior to the fact, then jeopardize with his email the revenue streams provided to NZ universities by foreign students willing to pay full fees of 20K or more but who often had no qualifications in their chosen field of study or who could not speak or write comprehensible english (as was the case with the student in question). This began long before National became government, but is now said to be worse because of twenty percent cuts in public spending on tertiary education.

The quest for foreign fees is such that when the same ex-lecturer was suggested some time later as a potential member of a foreign area focused business board, government and education officials purportedly objected on the grounds that his presence could disrupt recently-signed educational agreements between NZ and several countries in that region (this, in spite of his never having had an issue with students from that region and having significant visibility in academic fields relevant to it).

Such is the obsession with using foreign students as revenue generators. The trouble is that obsession has led to a gross lowering of academic standards for admission, passing and graduation of foreign fees paying students. This has had unpleasant results.

Long before National became government, instances of plagarism and bogus excuses for failure to complete course requirements on the part of foreign students well versed in how to abuse staff pastoral care responsibilities was already a thorn in the side of many lecturers, particularly those concerned about the quality of degrees and the well-being of students who worked hard to meet requirements. Managerial pressure to allow sub-standard students to pass is reflected in performance reviews and promotion criteria. The steady erosion of academic union influence eased the way for imposition of managerial edicts focused on quantity rather than quality of incoming students and graduates, to which were added academic restructuring projects that eliminated departments and courses deemed irrelevant to business or incompatible with profit-making.

Given increased academic job uncertainties in such environments, lecturers feel compelled to toe the managerial line, particularly in light of that ex-lecturer’s well publicized experience. The overall impact has been to devalue the reputation of many NZ university departments and programs while opening up a pandora’s box of predictable as well as unintended consequences.

One manifestation of the downside of the push to put high fees-paying foreign bums in seats has gone commercial: institutionalized ghost writing and student identity impersonation on behalf of Chinese students enrolled in NZ tertiary institutions. Some good student stories follow on the subject.

This situation has been going on for over a decade and has been the subject of repeated internal and public complaints (for example, public disclosure about the lack of security vetting of Pakistani and Saudi students seeking degrees in chemistry, chemical engineering and physics, or the well-reported use of Chinese students by PRC intelligence). The government and higher education institutions have been repeatedly warned about the dodgy side of foreign student admissions but have done nothing prior to media publication of the details.

I am not surprised by this commercialized academic cheating because it fills a market niche, and that niche was created by those who thought that NZ higher education instruction was a tradable export commodity for non-English speakers regardless of their cultural context. But with market opening comes consumer expectations, and under the current NZ tertiary foreign education model the expectation from foreign student consumers is to receive a first world-style degree by buying third world practical and ethical standards.

Like in so many other policy areas, unprincipled opportunity-takers on both sides of the process have benefitted at the expense of the common good. After all, and revenue-generation aside, encouraging dishonesty in any endeavour is bound to be deleterious over the long term.