19 Nov 2012

BNZ chief says shake-up of tax system needed

10:43 am on 19 November 2012

BNZ Bank chief executive Andrew Thorburn says property still enjoys too many tax advantages and changes are needed to promote investment in businesses.

The National-led Government has already tightened some rules around property deductions, but Mr Thorburn wants it to go further and, like some other commentators, says KiwiSaver should become compulsory.

Mr Thorburn gave a speech on money to the Trans-Tasman Business Circle in Auckland on Friday.

He says the tax system favours investment properties and this needs to change so other investments and savings can grow and over time, superannuation schemes should become compulsory.

"There are insufficient alternatives for people to invest in, in other asset classes other than property, residential property and commercial property, we need to develop some alternative investment vehicles."

He says that could include more companies listed on the stock exchange and a stronger and deeper venture capital and capital markets structure.

Mr Thorburn says the tax system currently favours investment in residential property, as opposed to bank deposits and dividends from companies, and that distortion needs to be addressed.

He says KiwiSaver is well established and regulated and it is now important to hasten the growth of those funds to allow them to be invested in New Zealand businesses to provide capital for them to grow, as well as building a retirement savings pool for New Zealanders.

"My view is that on balance the superannuation system should be compulsory, because it will start to change behaviour and attitudes and knowledge and it will build momentum around long-term savings for average New Zealanders."