11 April 2006

Key wrong again on investment tax

Opposition finance spokesman John Key is disingenious in saying all 29,000 investors in GPG will be adversely affected by changes announded today in the investment tax regime, said Finance Minister Michael Cullen today.

The vast bulk of these investors will not be affected as they will fall below the $50,000 cost-of-shares threshold above which the new rules apply.

Those that are affected have also enjoyed tax advantages for many years.

Many GPG investors will also benefit from the investments they have in super funds in New Zealand which will no longer pay tax on the capital gains made on selling New Zealand and Australian shares.

John Key has taken an extremely narrow view on this matter. His blinkered approach is in stark contrast to the support these measures are receiving in the investment community.

Accounting firm Ernst & Young described the changes as a "triumph in tax neutrality." New Zealand Exchange (NZX) CEO Mark Weldon said the changes meant "New Zealand equities will be able to compete more effectively on price, which will be very positive for New Zealand capital markets."

"The changes might not suit the sophisticated investor mates of John Key, but we believe we have got the balance right. This is a much fairer system which means tens of thousands of ordinary New Zealand investors saving through managed funds will no longer be disadvantaged," Dr Cullen concluded.

ENDS

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