It's becoming clear that the government's new bill on taxing investments is going to be a shambles and the outcome is likely to, therefore, be a mess.
The government yesterday caved into expensive lobbying by GPG and has given that company a five year holiday from the rules.
The move is stupid. It goes against the principles of what these changes are about - treating different types of investment vehicles equally.
Now a breach has been made in the dam by GPG we need to rally together and get other holidays and exemptions.
Full marks to the promotors of UK-listed investment trusts for efforts to put some concerted effort on the government for a class exemption for these types of vehicles. I bet collectively there are more New Zealanders invested in UK trusts, than in GPG, and the amount invested would be higher.
Let's hope they form some sort of coalition and fight the government.
The next to step up to the plate should be Australian managed funds. Why should ASX-listed investments be treated the same way as New Zealand domiciled investments but unlisted investments be treated under the international rules?
There is no logic.
It was interesting to watch an IRD official give a presentation on the tax changes the other day. While people may not agree with what is being proposed you have to feel for the officials.
They have worked hard to create something which they believe is better than the existing rules and is also in the national interest. Also they have done an excellent job consulting with the industry on the proposals.
Two comments that struck me were, that the bill would be introduced to Parliament on Tuesday "unless they chickened out". Turns out the bill was a day late, and the first change was made an hour after it was introduced.
Secondly there was an acknowledgement that the bill being introduced was incomplete.
This reinforces my view that important tax law was being rushed into Parliament without proper thought and preparation from the politicians.
Now that the government has given GPG a holiday I would urge other groups to fight hard for their own exemptions.
It's becoming clear that the government's new bill on taxing investments is going to be a shambles and the outcome is likely to, therefore, be a mess.