Investment tax proposal is red tape for no gain

The Labour Government’s plan to change the taxation of investments offshore will result in investors large and small being buried in an avalanche of compliance costs for no gain, says National Party Finance spokesman John Key.

Answers to written parliamentary questions reveal the Government will collect a paltry $8 million in its capital gains tax from individual investors with more than $50,000 of shares in the main overseas sharemarkets – the so-called ’grey list’.

“This is going to be a bureaucratic nightmare for those individual investors – all for the sake of just $8 million in revenue,” says Mr Key. “Eight million dollars will increase the forecast tax take by just 0.01%.

“People will need costly accountants and advisers to work their way through all this. What sort of economic logic is that?

“Meanwhile, Labour continues to deny that anyone with investments under $50,000 aren’t caught by these new rules.

“That is wrong. Those investors in passive funds in grey list countries will also get caught by the capital gains tax, whereas they didn’t before and the Government expects to reap $27 million in revenue from them.

“There are tens of thousands of small investors in passive funds. So what the Government is telling us is they are going to get three times as much revenue from the little guys as those with larger portfolios.

“The answers also reveal the cost in administering this package of tax changes to overseas investments will be $8 million. Has the Government got nothing better to do than to force New Zealanders to be subjected to an avalanche of costs all for no revenue to the Crown?

“No wonder the country’s coming to an economic standstill and Revenue Minister Peter Dunne is imploring that people put in submissions opposing the legislation.

“If this is the level of economic logic, then goodness knows what’s in store with the business tax review,” says Mr Key.

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