Avoiding and minimising tax is almost a national sport in New Zealand. There has been a grudging admiration for those who can get away with sticking it to Te Tari Taake.

Among the professional and entrepreneurial classes it is seen as par for the course to shelter assets and income in family trusts and company structures that help reduce or avoid tax.

Many of the multi-national companies operating in New Zealand funnel income, assets and debt through various tax havens and vehicles that keep tax paid here to a minimum.

Most of our politicians, city councillors, bankers, accountants and judges use such vehicles to protect their assets from the prying eyes of Inland Revenue, creditors, ex-spouses and, ultimately, the courts. New Zealand now has up to 400,000 family trusts.

It means the vast majority of taxes are paid by the mugs on PAYE and by those who have to pay GST for their goods and services.

The policy-making classes believe this dual tax system will not change because they run it. But the game is coming to an end, and it must if New Zealand Inc is to have any chance of balancing its books and avoiding national bankruptcy.

Anyone looking for a sneak preview of the public pressure to crack down on tax cheats just needs to look to Britain, the United States and Europe. The public mood is turning feral and the powers-that-be are responding.

The best example is the UK, where a grassroots campaign called UK Uncut has grown out of anger at public-service cuts. It is boycotting and protesting at individuals and companies seen to be avoiding tax.

Billionaire shopkeeper Sir Philip Green channels his wealth and income through various havens and his Topshop and BHS chains have been targeted by placard-waving protesters.

Vodafone and supermarket chain Tesco also face protests for minimising their taxes through various structures.

The British and US governments, both of which run budget deficits of about 10 per cent of gross domestic product, are also cracking down on tax havens. This week Britain and Switzerland agreed to charge a 50 per cent levy on assets hidden in Switzerland.

International pressure is growing on countries such as Ireland that are seen to be trying to "beggar thy neighbour" by offering tax havens. Companies such as Google that channel their GST-free revenues from the "cloud" and through low-tax vehicles in Ireland are now facing growing scrutiny.

So what are New Zealand's policymakers doing? Our Government is about to quietly drop its tax on gifting assets into family trusts, which is expected to unleash a wave of transference of assets into these trusts.

This week the Government agreed to try to set up a tax haven for the administration of pension funds.

This is unsustainable, because neither foreign governments nor our creditors will allow it.

It should also be unsustainable because consumers and voters eventually won't allow a large and wealthy swathe of New Zealand to avoid their responsibilities.

How long before an increasingly desperate body of PAYE taxpayers and GST-paying consumers tell their politicians and companies they have had enough?

Or do we have to wait for our creditors to force us to slash public services and wages and sell assets? That's what happened in Ireland and Greece, both of which have deeply ingrained cultures of tax avoidance and both of which ran budget deficits of more than 10 per cent of GDP.

This week our Government announced it would borrow 10 per cent of GDP this year to fund its deficit, mostly from foreign creditors.

What are we waiting for?

Email Bernard here