Tax on speculation could be blocked under TPPA

Tax Justice media release
4 April 2011
www.nogstonfood.org

Tax Justice supports the NZ Not For Sale campaign, which is opposing the National-led government’s behind-the-scenes negotiation of the Trans-Pacific Partnership Agreement (TPPA).

“Under the TPPA it would become very difficult to introduce a Financial Transaction Tax in New Zealand, which is one of our campaign goals,” says Vaughan Gunson, Tax Justice campaign coordinator. “Any move to bring in the tax would see government face the prospect of having to pay compensation to global investors.”

“Government decisions that adversely affect the profits of investors from the negotiating countries – Singapore, Chile, Brunei, Australia, Peru, Viet Nam and the United States – could be subject to rulings by international tribunals. That's why the TPPA is such a major threat to the democratic rights of New Zealanders,” says Gunson.

Tax Justice is calling for a Financial Transaction Tax to curb the ability of speculators to make tax-free profits from short-term investments in New Zealand financial markets. The tax would also raise significant government revenue.

“Following the global financial crisis there’s a need to discourage financial speculation, not further open up the New Zealand economy to financial pariahs, which is what will happen if New Zealand signs-on to the TPPA,” says Gunson.

Mr Gunson says momentum is swinging internationally towards a tax on financial transactions that targets the banks, big corporates and the super-rich. In Britain there’s the popular Robin Hood Tax campaign, which is being promoted globally by Oxfam.

Earlier this year the European Parliament voted overwhelming in favor of Financial Transaction Tax (see Euro MPs vote for Financial Transaction Tax, 9 March).

In October 2009, Brazil introduced a 2% Financial Transaction Tax on trading of the Brazilian dollar, to stop speculators destabilising the currency.

30,000 New Zealanders have so far signed the Tax Justice petition that calls for a tax on financial speculation and GST to be removed from food. The petition will be presented to parliament before this year’s General Election.

Spokesperson for the NZ Not For Sale campaign, Murray Horton (also of CAFCA), is currently on a nationwide speaking tour. For details go to http://cafcatour.blogspot.com/

For comment, contact:

Vaughan Gunson
Tax Justice campaign coordinator
021-0415 082
svpl@xtra.co.nz

Key backtracks, says foreign firms can sue NZ government under TPPA

Media Release: Jane Kelsey
7 February 2011

In November last year, Prime Minister John Key described as “far-fetched” the idea that investors could sue the New Zealand government directly in a secret international tribunal to enforce rules in the proposed Trans-Pacific Partnership Agreement (TPPA).

This week, US trade negotiator Barbara Wiesel said that was no longer New Zealand’s position, according to TPPA critic Professor Jane Kelsey.

In response to questions about New Zealand and Australian positions during a briefing to civil society in Washington on 31st January Ms Wiesel said “New Zealand had retracted the Prime Minister’s statement. It is not their position.”

Under standard US terms for such agreements, investors can claim millions in compensation from governments on the grounds that new regulation has adversely affect their investment. Under a TPPA that would apply to investors from all participating countries, including our largest sources of investment, the US and Australia, Jane Kelsey said.

“In other words, the Key government is happy for pharmaceutical firms in the US, Australian banks or Singapore-based Brierley Investments to sue the New Zealand government for millions in compensation if they think new laws or policies are unfair or unreasonable or erode their profitability”, said Professor Kelsey.

“We saw with the Hobbit, just a threat from a foreign investor is often enough to see a government cave. The leverage of Warners over our labour laws and taxpayer subsidies will pale into insignificance with a TPPA.”

Professor Kelsey speculates on three explanations for the flip-flop.

“Either John Key did not know what his negotiators were proposing to do when he described investor-state enforcement as “far-fetched”; or he was lying to the New Zealand public; or he has buckled to pressure from the US, and possibly his own Minister and officials, to agree.”

“This proposed bill of rights for foreign investors is even more frightening when government has announced assets sales and privatisation of ACC, policies which failed in the past and required the government to step back in.”

“The Prime Minister needs to be upfront about the government’s real position before the next round of negotiations begins in Chile on 14 February and explain why he is prepared to give foreign firms the legal power to override New Zealand’s sovereignty and extract settlements of hundreds of millions of taxpayer dollars”.

Contact Jane Kelsey on (021) 765-055.

More information about the campaign against the Trans Pacific Partnership Agreement is here: http://tppwatch.org