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Cullen should explain his U-turn

John Key MP
National Party Finance Spokesman

12 September 2006

Cullen should explain his U-turn

National Finance spokesman John Key says Michael Cullen should explain his U-turn today in which he's dumping unpopular tax rules on overseas share investments in favour of another plan he's previously rejected.

"It's well known that the Prime Minister and many of Dr Cullen's fellow ministers are opposed to his proposal for a capital gains tax on some overseas share investments, indicating he's deeply isolated on the issue.

"This U-turn is also an admission that Dr Cullen is in trouble with his support partners.

"If Dr Cullen is going to wave through a deemed rate-of-return method - which he indicated today he now favours - then he needs to explain why Kiwis should pay what is in effect a pseudo capital gains tax in a year when their portfolio loses money.

"And while he's at it, he would be well served to go back and read his many and varied comments that opposed the deemed rate-of-return method for exactly the reasons I just raised.

"Dr Cullen is at least finally admitting that his current proposal is a bureaucratic, compliance cost-ridden nightmare, and that it is unworkable.

"But if he is going to replace it, then the new method should be fair.

"How on Earth can it be fair for Kiwi investors to pay tax on a year in which they lose money on their portfolio?"

ENDS

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