Labour leader Andrew Little said a Labour government would ban foreign trusts from operating in New Zealand.

"I cannot see what the purpose is, apart from allowing citizens in other countries to avoid their tax responsibilities in their home countries. And I am at the point now where I am saying, actually, unless I can be convinced otherwise, we should just get rid of them," said Little talking on the Q+A programme.

Prime Minister John Key says he had asked the IRD what would happen if the Government simply banned foreign trusts, and their experts had said it was complicated and advised caution.

"It would be, I think, a dangerous decision to make as a knee-jerk reaction to ban foreign trusts overnight. Because we have, actually, very good tax rules, they are integrated tax rules and they are respected around the world," said Key.

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