Cullen in gun over windfall spendup

National is keeping up pressure on Finance Minister Michael Cullen to explain himself over a claim that a corporate tax windfall from the big banks which has gone on transport may have to be repaid.

Last Thursday Dr Cullen announced a $544 million tax windfall, of which $368 million came from company tax as the "financial sector" made unexpected payments.

He surprised everyone by ploughing $500 million of it into a one-off boost for transport projects.

But National Party finance spokesman John Key claims the corporate tax is money paid by the big banks to Inland Revenue to avoid future penalties as they await the outcome of court action on a tax dispute.

According to the publicly available disclosure statements, the amount in dispute is just over $1.6 billion, shared among Westpac, ANZ-National, ASB and BNZ.

Mr Key said Dr Cullen was putting the taxpayer at considerable risk and the next National government might be forced to repay the tax-in-dispute money with interest.

"It's the BNZ debacle all over again. He must reveal all, so taxpayers can see what's really going on. When you are dealing with numbers that are telephone numbers, you've got to start thinking about the material impact if it all goes against the Crown," he said.

Dr Cullen refuses to comment on the claims, as does the IRD.

The Herald has been told there may be more disputed tax payments to come from the banks - and therefore more corporate tax windfall for the Government.

An accounting expert who did not want to be named questioned the Government's handling of the tax-in-dispute money, saying it should not be considered cash available for spending.

The Treasury said this week normal practice with revenue in such tax-dispute cases was to make the money available for spending but note it in the Crown books as a contingent liability.

The expert said he was "gobsmacked" at the Treasury's comments, which went against "any principles of prudence".