John Key MP
National Party Finance Spokesman

2 May 2006
Cullen admits tax will cover most sharemarkets

Finance Minister Michael Cullen has confirmed that Kiwis who sell shares and repatriate the gains back home will be fully hit by his capital gains tax, says National Finance spokesman John Key.

Mr Key questioned Dr Cullen in Parliament today on new tax rules on investments by Kiwis in offshore sharemarkets.

“Dr Cullen confirmed in the House that the formula used for his latest envy tax is only a timing issue, and investors selling shares and repatriating the funds back home will be fully hit by his capital gains tax,” says Mr Key.

“In his rush to gather more revenue, Dr Cullen has gone from a situation where only 20 per cent of the world’s sharemarkets by value are subject to the capital gains tax to a situation where 98 per cent of sharemarkets by value are covered.

“The only two sharemarkets which will be exempt are the Australian and New Zealand sharemarkets – which make up just 2 per cent of the world’s sharemarket capitalisation.

“It is a hypocritical position for Dr Cullen to adopt because his Super Fund rightfully employs global diversification in their investment strategy.

“All investment should, by and large, be driven by smart investment strategies - not by tax policy considerations.

“The last time we did that we ended up with too many Angora goat farms and kiwifruit orchards.

“New Zealand can live without a new envy tax.”

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