Dunne blames UK trusts for opposition

Revenue Minister Peter Dunne is blaming the opposition to the government’s changes to the overseas investment tax regime on the UK listed investment trust sector.

Wednesday, August 30th 2006, 6:27AM

by Rob Hosking

Dunne told a constituent in an email, which has been sent to Good Returns, that UK-based investment trusts have been whipping up opposition and “have caused unnecessary fear and panic amongst many investors who will not be affected at all.”

Dunne told Good Returns yesterday that he believes investment trusts are behind a scare campaign.

“I’ve had something in the order of 7000 letters on this, and in the main three standard letters have been circulating. This is right down to the same typeface. I’m not sure of the companies behind them but they are clearly about the UK investment trusts.”

That though has been denied by the trusts themselves.

“They’re not from us. We haven’t written any letters,” says a spokesman for the group, Christopher Milne. “And we haven’t written any letters for any investors.”

Dunne says that too many investors have been seriously panicked over the issue.

“Some of the cases who have come to me have been quite harrowing – older people of limited resources who have been led to believe all sorts of things.

“A lot of them seem to think they will be paying 85% on their income. That’s the most common misconception.”

Dunne also says the UK based investment trusts are “a threat to the local funds management industry” although he says he believes the industry has been” somewhat slow to take up the cudgels” against the UK investment trusts.

“I’ve got nothing against people arguing their own case but I question the ethics of some of the tactics which have been used.”

Milne however says the investment trusts are simply arguing their own corner and they have been blamed for the activities of other groups.

He also suggests the government is becoming frustrated with the opposition to the tax changes and the investment trusts have become a convenient whipping boy.

Comment: Read Dunne's email and some further comments here.

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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