More retrospective legislation
The Herald reports:
The urgent measure relates to what are known as stapled securities, which allow companies to pay tax-deductible interest to shareholders instead of dividends.
Changes will be retrospective and the announcement was made without prior consultation with interested parties “because it is a matter of urgency since some companies may be contemplating the issue of the type of stapled stock in question”, Finance Minister Michael Cullen and Revenue Minister Peter Dunne said.
It might be for a sound purpose, but I never like retrospective legislation.
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Tags: Retrospective Legislation
February 26th, 2008 at 9:20 am
Thus endeth the Canadian deal for Auckland Airport I guess. No surprises though, I doubt National would have allowed such a significant tax leakage to occur either. Arguably it should have been done years ago.
February 26th, 2008 at 9:23 am
Its NOT retrospective in the normal sense. They have announced it will apply from yesterday!
Whats retrospective about that.
February 26th, 2008 at 9:30 am
What about legislation that validated unlawful election overspending – EFA?
February 26th, 2008 at 9:30 am
This is about blocking the bid for the Airport that is the primary aim and they will make the legislation as punative as possible. I simply cannot understand why the Labour Party oppose foreign investment in this way I assume it has something to do with the Greens.
February 26th, 2008 at 10:43 am
When the tax matter first arose, I found it worrying that an overseas based company could obtain some tax advantage that is not available to NZ entities. Surely if there is going to be any tax advantage it should be in favour of NZ entities. This seems to me adequate justification for the proposed legislation – to trip up a proposed deal taking advantage of an inequitable tax situation.
It is not clear whether the legislation is retrospective to time of announcement (which is probably acceptable) or retospective to embrace deals such as Auckland Airport (which is possibly acceptable as the deal can always be called off).
I also think it rather obnoxious that when such an offer is made, it is not ‘clean’ from smaller shareholders’ point of view. The cleanest offer is a nominated sum of cash for all your shares. Variable pricing, possibility of scaled back acceptances and payment in securities of ‘fuzzy’ value and complications of ’stapled securities’ are all nightmarish especially for smaller shareholders. When Fletcher Challenge was broken up, they swapped the ‘Energy’ shares for an obnoxious mix of securities that would be a real headache for ‘mom and pop’ shareholders. Fortunately a financial writer advised small shareholders to sell them into the market which all in all was worthwhile even though the cash received was slightly less than the bundle of securities offered.
February 26th, 2008 at 11:28 am
Frank, the EFA did not retrospectively validate any unlawful election overspending whatsoever. I think you are slightly mistaken. On the other hand there is the Appropriations bill…
February 26th, 2008 at 11:48 am
In some areas of life, the golden rule is, he who has the gold, makes the rules.
But in politics, when your ignorant masses have been sucked in by Socialism, dumbed down by “the long march through the institutions”, ANYTHING GOES when the target is ‘rich pricks”.
That comment of Mr Cullen’s actually “resonates’ with Labour’s core support.
Hence, the Westminster constitution becomes an irrelevance.
It’s not as if there aren’t whole books of theory from influential Leftists that explain in detail exactly what is happening here……
Charles A. Reich says something like “The Democratic system itself is the LAST thing to change”.
WAKE UP, everyone.
February 26th, 2008 at 1:06 pm
Riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight….
Seeing as we are going to be having a *General Election* later on this year, one must surely conclude that the evil commie march to world domination isn’t quite ready to trample over New Zealand just yet?
February 26th, 2008 at 2:05 pm
I don’t pretend to understand the intricacies of international taxation. But it seems to me the IRD spokesperson commenting that the move wasn’t specifically aimed at the Canadian takeover bid is ever so slightly disingenuous – specially when the government is trying to position itself as against foreign ownership of key public utilities.
Looks to me as though on the one hand they’re trying for a bit of political credit with a “nudge nuge, wink wink” to voters while at the same time trying to pretend to the markets that that’s not what they were up to at all.
February 26th, 2008 at 2:11 pm
Doh Capital is global and mobile The days of sovereign control is over Governments that want their citizens to enjoy the best standards of living have to get over it and create a tax environment that is attractive.
Other wise they and their citizens will be condemed to stand outside the tent in the cold looking in to watch others inside nice dry and warm and well fed.
That the reality folks and King Canut aka Dr Cullen just needs to get over it.
February 26th, 2008 at 2:16 pm
Ghost … considering the legislation has not yet passed its first reading, let alone been inacted, to announce that it will apply from last Monday begs the question …. ‘what part of ‘retrospective’ don’t you understand?
February 26th, 2008 at 7:44 pm
Would some knowledgable person please describe, in less than 400 words, what a stapled security is.
Something for the dumb bastards like me.