by Rob Hosking
Tables which accompanied the 2005 Budget included estimates the proposed changes to the offshore investment tax regime would probably cost the government about $130 million a year.
Yesterday’s pre-election economic and fiscal update shows a dramatic change in that estimate.
At the most, officials now estimate the cost to the government would be between $80-90 million.
However they also say the taxman could be $50-60 million up on the deal.
The impact of changes to how the government taxes offshore investment has continually been wound back by official forecasters.
When the government first did a rough estimate of the cost of likely changes following the release of the Craig Stobo report last year it was calculated the changes would see a drop in tax collected of about $250 million a year.
The gradual winding back of that estimate – to the point where the government may now reap more money – will give fuel to National finance spokesman John Key’s claim the move is a “tax grab”.
Submissions on the government discussion document outlining the proposed changes close on 30 September.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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