Quote:
quote:Originally posted by Halebop
The focus around taxing piecemeal and incrementally seems to be to avoid the distortionary impact that a capital gains tax on sale has on investment decisions. That is: I have an asset that is worth $200, I paid $20, so will be taxed on $180 at sale, therefore that contingent liability influences my decision to continue to hold lest my wealth diminish by $50 or $60 in a single hit from IRD.
If you believe the original discussion document, the whole point of this Cullen/Dunne proposal is to level the playing field between NZ and overseas investments. The main problem with NZ sharemarket investments is that we are based on an island nation about as far away from global commerce centres as it is possible to get. That means it is a big leap to go from being a sizeable player in the NZ market to expand overseas. For most NZ companies such a leap is too difficult and they satisfy themselves with being a big fish in a small pond, and getting rid of excess cash by paying high dividends.