John Key
National Party Finance Spokesman

9 February 2006

Cullen confirms capital gains tax backdown

Finance Minister Michael Cullen has today confirmed that he has been forced into an embarrassing backdown on his proposal to tax the capital gains of Kiwis investing in shares offshore, says National Finance spokesman John Key.

In a speech yesterday Revenue Minister Peter Dunne said the Government was now consulting on a modified tax proposal for offshore portfolio investments after almost all the 900 submissions against the original were ‘overwhelmingly negative’.

"Today, Dr Cullen has come out and confirmed the embarrassing backdown. This shows how poorly thought-out the proposal was in the first place,” says Mr Key.

"His suggestion that I want to abandon the current regime that taxes dividends on foreign-held shares is nonsense.

"His obfuscation won't hide the fact that officials are now suggesting that the regime shifts from taxing capital gains to taxing earnings per share.

"Michael Cullen must clarify what officials are telling the financial industry behind closed doors.

"Taxing earnings per share would add unnecessary complication to an already complex area of tax law.

"It would lead to non-compliance with tax laws by otherwise law-abiding New Zealand taxpayers," says Mr Key.

ENDS

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