The government has quietly added Shane Jones' Provincial Growth Fund to the list of government entities that are exempt
from paying tax.
The move was done so quietly that Revenue Minister Stuart Nash's office had to check with Forestry and Regional
Development Minister Jones' office when BusinessDesk asked for confirmation.
A Nash spokesperson confirmed that Provincial Growth Fund Ltd was created in September to hold the loan and equity
investments of the fund.
"It has no operational role in the day-to-day management and administration of Provincial Growth Fund Investments," the
Effective Oct. 4, PGFL was added to Schedule 4A of the Public Finance Act, which lists all public-purpose
Crown-controlled companies, and Schedule 35 of the Income Tax Act, the latter bestowing on it tax-exempt status.
"The company meets the necessary criteria to be exempt from income tax. This includes 100 percent of its shares being
held by ministers of the Crown and the fact that its primary purpose is to carry out government public policy –
investing in regional economic development," the spokesperson said.
This raises the question of whether the proposed Venture Capital Fund, which aims to stimulate investment in early-stage
ventures, will be added to the list.
The spokesperson says the bill establishing that fund is still before the select committee – the Finance and Expenditure
Committee is shepherding the bill through to its second reading.
Another question is why the New Zealand Superannuation Fund, which is tasked with helping to relieve the costs of
meeting the ageing population's superannuation needs, is not tax-exempt.
The Super Fund and ANZ Bank vie for position as the nation's largest taxpayers. In the year ended June, the Super Fund
paid about $500 million in tax, taking its contributions to government coffers to about $6.5 billion since its inception
in 2001. The Super Fund has returned about 42 percent of the government's contributions in tax.
The spokesperson says the Super Fund tax issue was raised in the Tax Working Group's report and that issues relating to
tax and how different entities fit which the government's public policy purposes are being addressed as part of the tax
policy work programme.
The controversial $3 billion PGF was established in early 2018 as part of the coalition government agreement between the
Labour Party and Jones' New Zealand First Party.
One of its early proposed investments was a $9.9 million loan to Westland Milk which was rescinded when that dairy
producer was taken over by Hongkong-based Jingang Trade Holding, otherwise known as Inner Mongolia Yili Industrial