Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search


Stobo report creates momentum for change

16 November 2004

Stobo report creates momentum for change

“A significant momentum for change now exists around some highly complex and difficult areas of tax law and much of the credit for that must go to Craig Stobo,” Finance Minister Michael Cullen said today.

Dr Cullen was commenting on the release of Mr Stobo’s report: Toward Consensus on the Taxation of Investment Income. He congratulated Mr Stobo on the high standard of leadership he had brought to the task, saying the government should now be in a position to outline in the coming budget its decisions in the area and to seek further consultation on the details.

“The motivating principle behind this work is that the economy works best when investment decisions are guided as much as possible by economic considerations and as little as possible by tax considerations,” Dr Cullen said.

Mr Stobo, formerly Chief Executive with BT Funds Management, was appointed by the government in July to consult widely with industry and other interested parties to on how to deal with problems around the tax treatment of investment income.

A key issue was that direct investment in New Zealand shares does not attract a tax on the capital gain but that indirect investment via a managed fund does.

“Mr Stobo found majority support for excluding from tax the capital gains made from both sets of investments. His own preference however, stated in the report, is for an “Investment and Savings Tax” incorporating the elements of a risk free return method to tax a deemed rate of return on investment by managed funds.

“The difficulty I have with that approach is that it does not put the two sets of investments on the same tax footing and to that extent fails to eliminate the existing distortion,” Dr Cullen said.

Other boundary issues identified in the report are: The different treatment of income from offshore investments and income from New Zealand investments. The tax preference given to grey list countries [Australia, Britain, Canada, Norway, the United States, Germany and Japan]. The difference between an individual’s marginal tax rate and the tax charged on income derived from collective investment vehicles, notably superannuation schemes which are taxed at 33 per cent even if the individuals covered only attract the 19.5 per cent rate on their incomes.

Dr Cullen said Mr Stobo’s brief had been to conduct a high level discourse and that much work remained to be done on the details.

“But because of the consensus Craig has generated around the need for change and around some of the directions that change might take, officials are now confident they can make real progress over a relatively short time frame on what have been stubborn issues.

“I want to put on record my gratitude to him for that not insignificant achievement,” Dr Cullen said.

Toward Consensus on the Taxation of Investment Income is available at or


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On Juggling Covid, And France’s Trump-like Populist

It is the age-old Covid problem. How to balance the needs for firms (and schools) to re-open against the need to protect public health. In the past, the balance has been struck by insisting that the best public health outcomes also deliver the best economic (and educational) outcomes. While that may still be objectively true, it is no longer a politically tenable position... More>>

RNZ: Prime Minister Jacinda Ardern announces Cabinet decision on Covid-19 alert levels

Northland will move to level 2 at 11.59pm on 19 October. Waikato will be held at level 3, to be reviewed on Friday. Auckland will remain in level 3 with current restrictions for another two weeks... More>>



Government: Red Tape Cut To Boost Housing Supply
First home buyers are set to benefit from changes to planning rules being advanced by the Government and the National Party that will enable more medium density housing and cut red tape that acts as a barrier to development... More>>


Economy: Inflation highest in over a decade
The consumers price index rose 2.2 percent in the September 2021 quarter, the biggest quarterly movement since a 2.3 percent rise in the December 2010 quarter, Stats NZ said today. Excluding quarters impacted by increases to GST rates, the September quarter movement was the highest since the June 1987 quarter... More>>


Government: New Zealand Increases Climate Aid Contribution

The Government is making a four-fold increase in the support it provides to countries most vulnerable to the climate emergency, Prime Minister Jacinda Ardern and Climate Change Minister James Shaw announced today... More>>

Pay Cheque To Pay Cheque: Half A Million New Zealanders Have No Savings
New findings from the Consumer NZ sentiment tracker found that 15% of New Zealanders had no savings, and a further 27% were anxious about their level of savings and would like to have more tucked away... More>>

Government: Mandatory Vaccination For Two Workforces

Large parts of two workforces critical to preventing the spread of COVID-19 will be required to be vaccinated, COVID-19 Response Minister Chris Hipkins said today. “Our education and health and disability workforces have done an incredible job throughout this pandemic to keep themselves and people safe,” Chris Hipkins said.... More>>

Green Party: Deeply Concerned Space Launches May Be Breaching Nuclear-free Laws

The Green Party is deeply concerned that space launches by Rocket Lab may be breaching nuclear-free laws, given our long-standing position as a signatory of the Nuclear Non-Proliferation Treaty... More>>




InfoPages News Channels