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Gas Control Inquiry: Commission releases tax

Gas Control Inquiry: Commission releases tax approach

The Commerce Commission today released a paper that outlines its proposed treatment of tax in determining its final recommendation on whether or not gas pipelines services should be controlled. The Commission invites interested parties to comment on its paper by 23 September 2004 . The paper is available on http://www.comcom.govt.nz.

The Commission commenced its Gas Control Inquiry in April 2003 following a request from the Minister of Energy under Part IV of the Commerce Act. The Commission released its draft report in May 2004, recommending imposing control on two gas transmission businesses and three gas distribution businesses.

During consultation on the Commission’s draft report, a number of interested parties suggested that some of the tax numbers provided by the gas pipeline businesses did not correctly incorporate the interest tax shield. As a result the Commission has considered this and other issues relating to its tax modelling.

Today’s consultation paper describes the Commission’s proposed approach to the treatment of tax in the cost benefit analysis, and indicates the impact of the approach using updated figures provided by the gas businesses.

The Commission is required to report its final recommendations to the Minister by 1 November 2004 .

Background

The Commerce Commission is undertaking the Gas Control Inquiry in response to a request from the Minister of Energy in April 2003. The Minister has requested the Commission report on whether goods and services supplied by persons in markets directly related to either a gas transmission system or a gas distribution system or both (gas services) should be controlled. The Commission is required to complete its report by 1 November 2004 .

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