Thursday, December 07, 2006

National will oppose tax bill

The National Party has decided to vote against a bill which introduces a new tax on portfolio investments in offshore companies. The Government changed the way the tax will apply after business sector protests, and it is now on the basis of a 5 per cent fair dividend rate. But National's revenue spokesman Lockwood Smith said today the system was inconsistent and complex. He said Finance Minister Michael Cullen had claimed the new tax was not intended to tax capital gains, but it clearly did. "The so-called fair dividend rate is not fair at all," he said. "The complexity of complying with this legislation, and the fear of IRD-imposed penalties should taxpayers get it wrong, will result in many individuals simply applying the maximum 5 per cent rate to their foreign share investements.

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