Revenue Minister Michael Cullen today explicitly ruled out any intention by the Government to introduce a capital gains tax on real property transactions.

Dr Cullen was responding to an incorrect media report from a meeting in Christchurch yesterday which stated that he had "hinted" at the possibility of introducing such a tax to better encourage investment in the productive sector.

"The reporter entirely misinterpreted the point I was making, and got it upside down.

"I was explaining that the current tax treatment of private superannuation schemes, the TTE system, effectively imposes a capital gains tax on the earnings in pension funds.

"I have already made clear that I believe this is a problem and support the shift to a TET system. This would exempt earnings from superannuation scheme investments from tax and would instead tax the pay-outs from those schemes.

"Such a change would introduce a more level playing field between superannuation and property investments, and would increase the incentives for retirement savings.

"The Government has already given an assurance that if the TET system is introduced, it will be run in tandem with the existing TTE regime to ensure that no-one is taxed twice," Dr Cullen said.

Contact: Patricia Herbert 471-9412 or 025-270-9013

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