Key John: Questions for Oral Answer — Questions to Ministers 
Key John: Questions for Oral Answer — Questions to Ministers 
[Volume:631;Page:3258] 
7.  
JOHN KEY (National—Helensville) 
 to the  
Minister of Finance 
: Does he stand by his statement in relation to the proposed new tax on overseas investment that “GPG is not registered in New Zealand it’s registered in the United Kingdom and its call for a special exemption makes no sense in terms of tax policy or fairness”; if not why not? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Yes. 
John Key 
: Why then only 4 days after making that statement did the Government announce it was creating a special exemption for companies that satisfy five criteria the combination of which applies to only one company in the world: Guinness Peat Group? 
Hon Dr MICHAEL CULLEN 
: Because we have been involved in discussions with Guinness Peat Group for some few weeks. Indeed I offered to Mr Tony Gibbs that officials could talk to the company some few weeks ago. We have arrived at a satisfactory outcome whereby if the member cares to read what is proposed he will find Guinness Peat Group has a transitional period to come within compliance with the new legislation. There is no permanent exemption from the proposals. 
John Key 
: Why is he making legislation that favours investors in just one company in the world when he has admitted it makes no sense and is unfair and does he think tax experts will struggle to understand that under his rules the new definition of a “grey list” country is New Zealand Australia or Guinness Peat Group? 
Hon Dr MICHAEL CULLEN 
: The member did not listen to the answer but then he never listens to any answers in the House. He always thinks he knows everything. Guinness Peat Group has 5 years to come within the new rules. But if the member understood anything about that company he would understand why it can within 5 years solve its problem with the British tax authorities. 
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? 
Hon Dr 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” and as usual the party that calls for tax cuts supports the avoidance of tax obligations which raises tax for everybody else in the country. 
John Key 
: Can the Minister confirm that under the proposed new tax rules individual investors who hold shares costing over $50000 in the UK USA and five other countries will have to pay an additional tax from 1 April next year and that that tax is a new capital gains tax which will diminish the returns they make on their savings? 
Hon Dr MICHAEL CULLEN 
: I can confirm that people who hold shares outside the “grey list” will in fact have a reduction in the existing capital gains tax which is a 100 percent capital gains tax outside of the “grey list”. The “grey list”— 
John Key 
: I raise a point of order Madam Speaker. 
Madam SPEAKER 
: There is a point of order but the Minister has not finished. As I heard the answer he was going to get to the point that I think the member is about to raise: addressing the question. 
John Key 
: I have asked the Minister that question on numerous occasions and every time he fails to answer it either in answers to written questions addressed to him or in answers to my oral questions in the House. He fails to admit the obvious which is that he is making changes to the “grey list” countries and that it is a new tax if an investor owns more than $50000 in total in shares in those countries. Why can he not admit it is yet another tax grab or capital gains tax? It is not very hard to admit that is the truth. 
Madam SPEAKER 
: That is not a point of order. Obviously the Speaker cannot direct the answer that members want to be given but I would like the Minister to please complete his answer in the light of the comments. 
Hon Dr MICHAEL CULLEN 
: I was getting there. Just to excite the member I was teasing him for a few seconds. A capital gains tax applies within the current overseas investment regime. The exemption from it for the “grey list” countries has been used as a means of tax avoidance. As a consequence a unified regime will now be applied. That is supported in some form or another by almost every tax expert who has looked at that issue. 
John Key 
: Does the Minister think that people who invest their savings for their retirement should be penalised for directly investing their savings outside the tiny sharemarkets of Australia New Zealand and Guinness Peat Group; and why is he on this crusade if it is not simply just to get additional taxes which clearly he does not need? 
Hon Dr MICHAEL CULLEN 
: The overseas investment part of this regime is assumed to be revenue neutral. The rest of the regime will cost some $113 million a year in lost tax revenue. That increases the return to savers overall. But it does deal with the issue of the deliberate creation of tax avoidance vehicles which that member clearly supports. 
John Key 
: Has he seen the letter dated 11 October 2005 from the Rt Hon Winston Peters to a constituent in which he stated: “New Zealand First supports savings incentives and is opposed to new taxes.” and has he seen a letter written on 2 December 2005 by the Hon Peter Dunne to a constituent stating: “United Future opposes capital gains tax and I am happy to assure you that as a party we will not support any moves in that direction. I certainly will not be promoting a capital gains tax.”; and on the basis of that is he worried about getting the numbers to pass the legislation? 
Hon Dr MICHAEL CULLEN 
: No no and no. The only member of this House who I know has supported a general capital gains tax for many years—up to the point that he became a National Party MP—is Dr Donald T Brash.