Cullen was commenting on the release of Stobo’s report: Toward Consensus on the Taxation of Investment Income. He congratulated Stobo on the high standard of leadership he had brought to the task, saying the government should now be in a position to outline in the coming budget its decisions in the area and to seek further consultation on the details.
“The motivating principle behind this work is that the economy works best when investment decisions are guided as much as possible by economic considerations and as little as possible by tax considerations,” Cullen said.
Stobo, formerly Chief Executive with BT Funds Management, was appointed by the government in July to consult widely with industry and other interested parties to on how to deal with problems around the tax treatment of investment income.
A key issue was that direct investment in New Zealand shares does not attract a tax on the capital gain but that indirect investment via a managed fund does.
“Stobo found majority support for excluding from tax the capital gains made from both sets of investments. His own preference however, stated in the report, is for an “Investment and Savings Tax” incorporating the elements of a risk free return method to tax a deemed rate of return on investment by managed funds.
“The difficulty I have with that approach is that it does not put the two sets of investments on the same tax footing and to that extent fails to eliminate the existing distortion,” Cullen said.
Other boundary issues identified in the report are:
Cullen said Stobo’s brief had been to conduct a high level discourse and that much work remained to be done on the details.
“But because of the consensus Craig has generated around the need for change and around some of the directions that change might take, officials are now confident they can make real progress over a relatively short time frame on what have been stubborn issues.
“I want to put on record my gratitude to him for that not insignificant achievement,” Cullen said.
| « President to preside over a weakening economy and dollar? | Reaction to Stobo report » |
Special Offers
© Copyright 1997-2024 Tarawera Publishing Ltd. All Rights Reserved