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Michael Cullen is wrong, wrong, wrong

Thursday, May 25th 2006, 9:45PM

by Philip Macalister

The more these new tax plans for investments develop the worse they look.

As I said before IRD officials have worked hard on these proposals and have come up with something they believe is an appropriate solution to the so-called "problem".

The new problem is that the proposals are now in the political process and Tuesday's session in Parliament showed the risks.
National Party finance spokesman John Key asked whether anyone other than GPG was going to get special treatment under the rules.


Specifically he was thinking about UK listed investment trusts.

The following is what was said in the House according to Hansard:

John Key: Will the Government cave in to any other companies if they too start to take out full-page ads in the newspaper, and in that case, which companies?

Michael Cullen: No. I see suggestions are made that those who set up UK investment trusts should have some kind of transitional exemption. Those trusts are set up deliberately as avoidance mechanisms using the grey list.

Cullen is wrong, wrong, wrong. Many UK listed investment trusts like Foreign and Colonial have been around for more than a century.

They are a bonafide investment structure both in the UK and New Zealand. They are another form of legitimate managed fund but with a number of differences to the traditional NZ-domiciled fund.

Comments like this from senior politicians worry me as it suggests they don't understand or know enough about the savings world. If they don't know then they can't be expected to make sensible decisions.

PS: It is interesting to see the Sunday Star Times has picked up on this too. See it's piece: Investors spitting tax over trusts here

As usual I leave you with my invitation....if you would like to comment on this Blog send an email to blog@goodreturns.co.nz
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