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Tourism Industry Whacked With Retrospective Tax

Tourism Industry Whacked With Retrospective Tax Grab

Wednesday, September 12 2001 Rodney Hide Press Releases -- Taxation


ACT finance spokesman Rodney Hide says government MPs ' including the Greens -have seriously damaged the integrity of New Zealand's tax system and the stability of New Zealand law, with their backing in the Finance and Expenditure Select Committee of Michael Cullen's retrospective tax on inbound tourists operators, schools and universities.

"The extra tax on the tourist industry is estimated at $150 million and the extra on schools $50 million. This is a huge sum to claim retrospectively," Mr Hide said.

"This money has been taken unlawfully. Rather than give it back, this cash-strapped government is changing the law retrospectively so that it gets to keep it.

"This is legally, economically, and morally absurd. How can anyone pay taxes with confidence if the tax laws can be changed to a taxpayer's disadvantage back 15 years? The move is bad economically because it sends a signal that doing business in New Zealand is risky because this government shows itself to be prepared to raise taxes retrospectively. It is morally wrong because the money has been taken unlawfully and this government just won't up and admit it.

"The anomalies created are huge. Schools that never paid GST on foreign students won't have to pay it. Those who paid the GST but received their lawful refund by May 14 will get to keep their refund. But those who have paid the tax and have yet to receive their refund, will lose out. This is arbitrary, highly discriminatory and just plain unfair.

"Submission after submission was heard against this iniquitous piece of legislation. Dr Cullen's simple response was that he needed the money more than the taxpayers who it rightly belongs to. Government MPs on the select committee voted accordingly.

"Worse, they moved to toughen up the legislation. Originally, Dr Cullen had tried to soften the blow by declaring: "we're happy to make refunds if they are passing back to the original overseas customers, but they are not going to get a windfall gain out of this situation". But so desperate is the government for any cash it can grab, that even this modest concession has been wiped out by the select committee.

"This is a sad day for taxpayers in New Zealand. It's especially a sad day for the tourist industry which had no help from their Minister, Mark Burton, on this unfair and absurd tax grab.

The Taxation (Annual Rates, Taxpayer Assessment and Miscellaneous Provisions) Bill was presented to the House from the FEC today.

For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

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