Retrospective Taxation Chills Investor Sentiment

Media Statement
Embargoed Until
2pm, Thursday 28 February

Retrospective Taxation Chills Investor Sentiment

The prospect of the Government imposing massive retrospective liabilities on owners of land planted in forestry before 1 January 1990 who decide to change the use of their land risks having a chilling effect on investor sentiment throughout the economy, the Flexible Land Use Alliance said today.

The Alliance, which consists of Blakely Pacific Ltd, Carter Holt Harvey Ltd, Fonterra Co-operate Group Ltd, Forest Enterprises Ltd, Landcorp Farming Ltd, the New Zealand Forest Owners Association Inc., PF Olsen Ltd and Wairakei Pastoral Ltd, was launched in Wellington today.

The Alliance’s spokesman, Ross Green, said it was aware of increasing disquiet in the investment community over current proposals to impose massive retrospective liabilities on owners of forests planted before 1 January 1990 who choose to change the use of their land.

The liabilities, previously feared to be as much as $13,000 per hectare may now reach as much as $65,000 per hectare, according to the Alliance’s spokesman, Ross Green.

“Business confidence in New Zealand depends on investors having confidence that the rules of the game will not suddenly be changed on them,” Mr Green said.

“In particular, investors need to know that if they undertake a legal economic activity today, Parliament will not suddenly decide to impose penalties for that activity many years later.

“Today’s trees that are coming up for harvest were planted anything between 20 and 90 years ago. When investors planted those trees all those years ago, they could not have anticipated that Parliament would decide, in 2008, to impose such massive liabilities on them.

“New Zealand will not be seen as a safe destination for investment while these proposals for the retrospective imposition of liabilities remain on the table.”

ENDS

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