The Front Page podcast: Facebook and Google slapped with surprise new tax

Mark Zuckerberg, chief executive officer of Facebook, which may face a new tax regime in NZ.

Each weekday The Front Page keeps you up to date with the biggest news in New Zealand. Today it's a surprise tax on Google and Facebook, possible capital gains tax for the rest of us, Huawei might be allowed to build our 5G network after all, and New Zealanders love beer even more than you thought. Hosted by Frances Cook.

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Google and Facebook are among the internet giants facing a surprise tax.

In news just broken by the New Zealand Herald and Newstalk ZB, Cabinet is exploring a new tax on multinational companies by targeting digital revenues.

The Prime Minister has now confirmed the move.

Jacinda Ardern says the move is about "fairness and balance in the tax system".

She revealed Cabinet had agreed to issue a discussion document about how to update New Zealand's tax framework to ensure multinationals pay their fair share of tax.

"Highly digitalised companies, such as those offering social media networks, trading platforms, and online advertising, currently earn a significant income from New Zealand consumers without being liable for income tax.

"That is not fair," Ardern said, adding that the Government is determined to do "something about it".

The move follows the introduction of a similar tax in France, and a report last month by the OECD's Base Erosion and Profit Shifting (BEPS) working group that said the challenges faced by the increasingly digital global economy would be a key area of work this year.

The proposed tax in France is a levy on all internet direct sales, advertisements and the sale of private data.

Similar measures are being discussed by the European Union and the United Kingdom, but limited to online advertising. Proposed levies have ranged between 2 and 3 per cent of annual revenues.

The issue is multinational companies selling good or services online, and then running profits through low-tax countries.

It's been a looming issue in New Zealand for several years.

The Herald tax gap investigation into corporate tax avoidance in 2016 found 20 of the most aggressive multinational companies recorded $10b in annual revenues but collectively paid less than $1.8m in corporate income taxes.

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That's not the end of the tax news. An announcement is coming this week that's expected to mean a capital gains tax for New Zealand.

The long-awaited Tax Working Group's final report will be unveiled on Thursday and all the indications are that it will contain a plan for such a tax.

Craigs Investment Partners head of wealth research Mark Lister says he and everyone who's followed it will be incredibly surprised if a capital gains tax isn't there.

He says the interim report was pretty clear that was the direction the group was heading, but the question was what would in the detail of how it would be applied, and the exemptions.

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It's a divisive subject not only among voters, but also among experts.

Paul Glass, executive chairman of Devon Funds Management, says he was initially in favour of a capital gains tax, "but the more you look into it the less appealing it is" so he now opposes it.

He says that superficially, the tax sounds fairer.

But it would add huge complexity to what is currently one of the world's simplest tax systems, and would result in an industry advising on tax and minimisation structures.

But Westpac chief economist Dominick Stephens backs a capital gains tax.

He says it would improve housing affordability, lead to a higher rate of home ownership, and help reduce the over-reliance on property investments.

He says it would also improve incentives to engage in paid work if income tax was reduced.

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Spark has been given new hope - and Prime Minister Jacinda Ardern a fresh headache - with the surprise news the British government will use Huawei to roll out 5G mobile network upgrades.

This comes off the back of serious efforts by the US to convince its allies to ban the Chinese company from high-speed telecommunications systems due to security risks.

New Zealand has followed the US and joined a raft of other countries in banning Huawei from any involvement in the rollout of 5G technology.

There has since been signs of political fallout from China. Ardern has refused to say whether any Huawei issues have come up through diplomatic channels, or whether there has been any political blowback from China.

However, the findings by the UK now suggest NZ's ban could have been pre-emptive.

The Financial Times reports the British Government has decided it can mitigate risk from using Huawei equipment in 5G networks.

It's a development the paper calls "a serious blow to US efforts to persuade allies to ban the Chinese supplier from high-speed telecommunications systems".

The UK paper also quotes Robert Hannigan, former head of British spy network GCHQ, saying they had "never found evidence of malicious Chinese state cyber activity through Huawei".

Spark spokesman Andrew Pirie says the company is seeking more information on the apparent UK development.

The telco still maintains hope that a revised Huawei proposal could be given the okay by the GCSB.

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What's been called the "China chill" is now hitting New Zealand schools.

The number of Chinese students enrolling in our schools has plunged by more than 1000 this year, amid record numbers of last-minute cancellations.

The drop of an estimated 20 to 30 per cent is already hitting school budgets and may force some to ask Kiwi parents to pay more for "extras" such as school camps.

Patrick Gale, principal of the country's biggest school Rangitoto College, said 71 Chinese students had enrolled to study at the college this year but 10 per cent cancelled their enrolments.

He says they've never had this many cancellations before.

John van der Zwan of the Schools International Education Business Association says China accounted for 50 to 60 per cent of New Zealand's overseas students last year, and their numbers were down sharply this year.

He says no one really knows why, but the current conversations around possible trade problems, and Huawei, aren't helping."

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Police are investigating a new discovery which may hold crucial clues to what sparked the Pike River mine disaster in 2010.

Former Chief Inspector of Mines Tony Forster says he discovered last week that a photo of an electrical cabinet that was blown to the surface in the explosion had never been seen by families of the 29 dead miners, and may not have been seen by the Royal Commission that investigated the disaster.

The cabinet itself also appears to have gone missing.

He gave the photo and a statement to police at Pike River last week, and Assistant Commissioner Tusha Penny says the police are now making inquiries.

The Stand with Pike group, representing the bereaved families, says it was particularly shocked that the photo may not have been seen by the Royal Commission.

Sonya Rockhouse, whose son Ben died in the mine, says the lost evidence is "immensely disturbing".

She says it's a possible ignition source, and the first real piece of evidence of its kind that has been found.

Anna Osborne, who lost her husband in the Pike explosion, says anyone who knows anything needs to come forward.

And Bernie Monk, whose son died in the disaster, believes the electrical cabinet is just one of many items to go missing.

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Food and vegetable restrictions on Auckland's North Shore, could go on months if MPI finds more Queensland fruit fly have bred.

The ministry warned that if it established here, the Queensland fruit fly could seriously harm fruit and vegetable crops and affect exports of some produce.

To date, no further signs of fruit flies have been found.

If that continues, restrictions will be lifted by March 1.

But if a breeding population was detected the operation would go on for months.

Extra traps have been added to areas extending 1.5km from where the fly was found.

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The Government will spend $20 million through the Provincial Growth Fund to boost pest control tech and limit 1080 use

Conservation Minister Eugenie Sage says new types of traps, surveillance and data-management technologies, lures and remote-sensing tools could be among the new innovations produced because of the funding.

She says the new approach will be for maintaining predator-free environments with innovative techniques once initial pest eradication is achieved.

Regional Economic Development Minister Shane Jones says the funding will bring tens of thousands of hectares of rural and forested land under predator control, create regional jobs and stimulate demand for education at regional training institutes.

Predator Free 2050 now wants expressions of interest from predator-eradication projects from local authorities and community-backed entities in the Provincial Growth Fund "surge regions" – those are regions facing high unemployment, low wages and low productivity when compared to the rest of the country.

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Tasman growers are having to choose crops to leave high and dry, as their water allowance is slashed.

From today, the Waimea Plains moves to stage 4 rationing, meaning businesses there are allowed to use just 35 per cent of the water their consent allows for.

Wai-West Horticulture Director Julian Raine says they're turning off the water supply for some of their apple varieties, so the others can stay hydrated.

Former Federated Farmers Nelson President Martin O'Connor says farmers and growers have already been trying to stretch their allocated water use.

He says they're practically praying for more rain.

For more on this story, tune in to Newstalk ZB

New Zealand may now have more breweries per capita than anywhere else in the world.

The fun fact comes as part of an industry report put together by the New Zealand Institute of Economic Research, which shows our brewing industry is now worth $2.3 billion.

It says New Zealand has 218 breweries - more per capita than the United Kingdom, Australia and the United States.

The industry employs approximately 22,000 people.

Brewers Association of New Zealand executive director Dylan Firth says visitors to New Zealand spent $242m on beer last year, and increasingly tourists specifically wanted beer-related tourism.

The report shows the country's beer industry has grown rapidly in the past five years, particularly the craft beer and low-alcohol categories, at a rate of 13 per cent each year since 2016.

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That's the Front Page for today, Monday, February 18, making sure you're across the biggest news of the day. For more on these stories, check out The New Zealand Herald, or tune in to Newstalk ZB.

You can subscribe to this podcast on Apple podcasts here, iHeartRadio here, and Stitcher here.

If you like to stay up to date on social media, you can find host Frances Cook on Facebook here, Instagram here and Twitter here.