Labour knew Transpower deal was to be outlawed

National Party Finance spokesman John Key says Michael Cullen must try harder to explain why he gave his backing to Transpower’s involvement in a tax deal he knew was about to be outlawed in the US.

Mr Key is commenting on reports today which say ‘that while the move by the IRS to ban silos was known to New Zealand officials, Transpower went ahead with completing its cross-border lease regardless’.

“New Zealanders deserve to know why Michael Cullen gave his blessing to an SOE to go ahead with a tax deal that was about to be made illegal?

“Armed with this information, did he raise these concerns with the US Embassy?”

“I’m absolutely certain Dr Cullen would have condemned the practice if investors in New Zealand were dodging tax in the same way,” Mr Key says.

According to today’s reports another State-Owned Enterprise, the Airways Corporation, was halfway through such a deal when it circulated an email saying, ‘yesterday a US senator and a tax committee decided they wanted to change the tax law that allowed cross-border leases. There has been some bad publicity over there recently about local/state governments using these leases to erode the US federal tax base.’

“In other words, Dr Cullen must have known that US investors were using the Transpower deal to avoid paying tax.

“There has recently been a remarkable silence from the Finance Minister’s office on difficult issues, such as tax in dispute and cross-border leases,” says Mr Key.

“Is this really the sort of leadership we can expect under Labour?”

Ends

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