25 Aug 2010

Lower tax on savings to be considered by working group

8:02 am on 25 August 2010

Taxing income from savings and investments at a lower rate is one of the ideas being considered by a new Savings Working Group.

The seven-member body, chaired by company director and consultant Kerry McDonald, will investigate ways to boost the levels of savings in New Zealand.

The group has been given a wide brief, including looking at the role of Government savings as part of the national savings picture, the fairness and effectiveness of current KiwiSaver subsidies, and the possibility of moving to a dual tax system.

PricewaterhouseCoopers chairman John Shewan says a dual system could address some savers' concerns about being taxed twice.

The contrary argument, he says, its that a dual system would go against the flat base approach New Zealand has been following for some time.

Mr Shewan says the Tax Working Group briefly looked at a dual tax system, but the idea became too complex too quickly, and moved beyond the groups specified scope.

The group is expected to report back to the Government by January.