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Why this is my last jar of Marmite

It’s fair to say I was raised on Marmite. For the duration of my school life, from age 5 to 18 I took a home made lunch to school every day. It almost always contained sandwiches, and invariably one of those was Marmite and cheese, a combo I still love to this day. Even now, Marmite on toast is as often my breakfast of choice as anything else.

I know plenty of people that love Vegemite just as strongly as I love Marmite. Many find Marmite overly sweet, and if I had discovered them both as an adult, who’s to say I wouldn’t prefer Vegemite’s darker, yeastier flavour now?

When news broke that Sanitarium (Marmite’s producer) had experienced production-stopping earthquake damage to their factory I was quick to lay in stocks to ensure my daily supply would remain uninterrupted. I’m still working through the last 1.2kg jar I purchased, but in all conscience, I cannot buy another jar of Marmite from Sanitarium, or support any of their products any longer.

Sanitarium in New Zealand is wholly owned by the Seventh Day Adventist Church, as is their sister company in Australia. This means they pay no corporate tax in either Australia or New Zealand, as their status as a religious organisation gives them an exemption. Their estimated turnover (because they are not required to divulge such information) is $300 million per annum.

New Zealand has a fairly substantial problem with corporate tax avoidance. While we might get hot under the collar about benefit fraud ($23 million last year), estimates of lost tax range from $1-$6 billion per annum. When the cost of alleviating child poverty in New Zealand is estimated at $1.5-$2 billion per annum you can see what we are missing out on as a society. As Catriona MacLennan puts it; if the rich stopped cheating, we could eliminate child poverty.

I find corporate tax avoidance pretty distasteful, but a legislated tax exemption for particular businesses (and in this case, a very successful, dominant one at that) is a completely avoidable own goal against the nation’s balance sheet.

Until Sanitarium start paying their way, none of their products will grace the shelves of our pantry.

Oh, and as a post script to the story, it seems Sanitarium are also discriminating against independent food retailers. Seen at our local Moore Wilson’s:


29 Comments »

  1. Teresa said,

    March 31, 2013 @ 10:08 pm

    One S, two Ps. Just sayin’ :P

  2. Neil said,

    April 1, 2013 @ 10:03 am

    I wholeheartedly agree with you on this, and applaud you for taking a stand.

    However, it’s beyond naive to think that ‘we could eliminate child poverty’ if we managed to get a few billion extra from tax avoiders. There is no example anywhere in human history of socioeconomic problems like poverty being cured by simply handing out more money.

    I certainly want to see large-scale tax cheats apprehended and jailed. But the few billion dollars we might recover just goes into a much larger pot and can be used to give a one percent increase in a huge variety of programs that already benefit people.

    Expecting to ‘eliminate’ anything as systemic as poverty is just hopelessly wishy-washy, and you shouldn’t be surprised if people’s eyes glaze over when you make sweeping statements like that.

  3. Louis M said,

    April 1, 2013 @ 10:53 am

    Nice post and I have to agree. It’s disgusting.

  4. Alex Taylor said,

    April 1, 2013 @ 2:00 pm

    I guess the question at the heart of this is in your conclusion, “should money raised for charitable reasons be exempt from tax”. Here is another NZ Herald article looking at the tax break side of things.
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10816412

    Having a closer look, Sanitarium are required to file a public annual return. It isn’t particularly detailed but outlines the main areas of income and expenditure.

    In their last annual return, they had income from all their “Group 1 entites”, which includes Sanitarium, Lisa’s and Naked Organics of $182M and costs to run those (incl wages etc) of $177M, which left them $5M, or 2.95% of their services income to spend. They spent that, and income from other sources like donations, incoming grants on grants and other expenditure.

    References:
    http://www.register.charities.govt.nz/CharitiesRegister/PublicAnnualReturn?nocId=466ab024-e852-e211-84ab-00155d0d1916&charityRef=NEW19501&accountId=580fe12e-831c-dd11-99cd-0015c5f3da29&searchId=0a4d59a7-24bc-4a9c-a109-20467f13898a&nocRef=SEV19486AR005
    http://www.avalonsguide.com/anab/2012/09/sanitarium-by-the-numbers/
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10816412

  5. Owen said,

    April 1, 2013 @ 5:35 pm

    I gave up on them when they treated that UK shop owner like crap for importing the UK version for sale in his own shop.

  6. john said,

    April 1, 2013 @ 5:40 pm

    it’s also disappointing to see that Moore Wilsons has misspelt disappointing.

  7. Tim said,

    April 1, 2013 @ 9:21 pm

    While it is true that countries like NZ and AUS have problems with corporate tax avoidance, this is not *technically* tax avoidance. Tax avoidance is where people cheat the system to get advantages they shouldn’t out of the tax system.

    On the other hand, the exception that Sanitarium uses is precisely what they are meant to do. It is the precise reason why we have an exception for businesses run by charities – so that the charities can get all the money without paying tax. Because ultimately, the SDA is a charity.

    If you have a problem with this picture, that’s ok. But don’t blame Sanitarium for something put in place by the government years ago. Blame the law that says this is what they should do.

    Either you need to decide that churches shouldn’t be charities (in which case I encourage you to look at all the social work that churches like the Salvation Army and yes, the SDA do in their communities), or you think that charities shouldn’t be able to run tax free businesses because you think that only the government should be in the position of using money that is allotted for the public interest. In that case, you might also like to criticise the 33% of donations that we get back as a tax rebate.

    Finally, you might be interested to know that it isn’t just Sanitarium who use this exception. As well as churches a lot of Iwi are using charitable businesses to generate income for their charitable purposes. Personally I think it is a good thing that people who are marked down as charities can invest money and get a tax-free return, because it allows them to do more good. But that’s just my opinion.

  8. Tom Hope said,

    April 1, 2013 @ 9:28 pm

    Owen, you might be interested to learn that Sanitarium has actually been very lax on enforcing their trademarks, to the point that they have almost lost the brandname “Weetbix” just by letting other people use it a whole bunch. This is why they did eventually take action against the UK stuff, because if they didn’t they would effectively lose the rights to the name “marmite” meaning that anyone could make a product with that name. Which is risky for any business.

  9. Matthew Holloway said,

    April 2, 2013 @ 8:49 am

    Alex Taylor said: “I guess the question at the heart of this is in your conclusion, “should money raised for charitable reasons be exempt from tax””

    Tim said: “Either you need to decide that churches shouldn’t be charities […] or you think that charities shouldn’t be able to run tax free businesses”

    Perhaps, but the best analysis of this is in the book The Purple Economy by Max Wallace and they suggest ways of tightening up the tax code in Australia and New Zealand that don’t involve those kind of dilemmas.

    Now I read the book a few years ago and if you disagree you really should just go and read the book because I may be remembering it wrong but … scrap the religious category, and instead have a house of worship category. Genuinely charitable acts of churches would still be tax exempt under other charitable categories, and houses of worship (inc. admin buildings) allows conventional churches but it disallows corporations masquerading as religions.

    Now when trying to clarify and define a difficult subject like religious charity there will be always be outliers. The point is more to start discussing where the line is because right now there is no line which results in less tax to fix problems in our society like child poverty.

  10. FarmGeek said,

    April 2, 2013 @ 9:00 am

    Alex and Tim

    I have no problem with charitable activity per se, and if a church wishes to fund this they should be able to, from their tax-paid surplus, if they run a business to fund that purpose.

    The nebulous justification of “the advancement of religion” gives too much room for non-charitable work in my opinion.

    Thanks for your thoughtful comments.

  11. Mark Harris said,

    April 2, 2013 @ 1:01 pm

    Tim said: “Tax avoidance is where people cheat the system to get advantages they shouldn’t out of the tax system.”

    No, that’s tax evasion. Tax avoidance is where you legally manipulate your revenue stream and status to legally avoid paying tax. I used to work at IRD – it’s one of the things you learn on your first day ;-)

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