John Key MP
National Party Finance Spokesman
11 April 2006

Capital Gains Tax On Shares Unfair

The Government has hit thousands of Kiwi shareholders with an unfair tax attack through its plans for a capital gains tax on some shares, says National Finance spokesman John Key.

He is commenting on today’s changes to the tax regime on investments overseas.

“It’s madness that the 29,000 New Zealanders who have shares in Guinness Peat Group, for example, will now be hit with collateral damage by Michael Cullen’s latest tax grab.

“Because GPG is domiciled in the UK, its New Zealand shareholders will be hit by this new 5 per cent capital gains tax even though GPG is listed on the New Zealand sharemarket.

“GPG owns substantial assets in many companies in New Zealand, like Tower and Turners & Growers.

“It is an unfair plan put in place for no good reason at all.

“Kiwi investors shouldn't be fooled by the 5 per cent cap either. This only applies until they sell the shares and repatriate the money to New Zealand. Then the outstanding capital gains still owing will have to be paid – at the person’s marginal tax rate.

“Today’s announcement follows a typical path of all Dr Cullen’s attempts to reform the tax system, whereby some relief is given but this is immediately offset by increased taxes in another area.

“New Zealanders will remember how quickly the personal tax threshold adjustments were put in jeopardy once the carbon tax was axed. True to form, Michael Cullen has done it again.

“What message does this send to New Zealanders seeking to invest and diversify their savings? Why is the Labour Government going out to penalise them?”

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