MEDIA RELEASE
14 October 2002
GST WILL DISADVANTAGE SAVERS
"The Government Discussion Document released last week
raises the prospect of applying GST on the management fees of savings through managed
funds. This prospect should be of major concern to all New Zealanders, said Vance
Arkinstall, Chief Executive of Investment Savings and Insurance Association.
New Zealand already has the lowest personal savings rate of all
OECD countries. Rather than increasing the cost of saving for New Zealanders, we need to
be directing our energy to making it easier and more attractive to save, said Mr
Arkinstall.
The thought that GST may be applied to the management fees of
unit trusts but not to superannuation products raises divisions and distortions that make
little sense. The funds management industry has come a long way in improving the
transparency of its products for the benefit of savers. It would be a retrograde step if,
in order to provide the best possible return to savers, it was forced to bundle its fees
to escape GST, said Mr Arkinstall.
The application of GST is almost certain to result in increased
costs to the saver. This increase in cost would take place at a time when we face lower
returns as a result of lower interest rates and low inflation. In this environment why
would anyone want to make it more difficult for saving in managed fund products, Mr
Arkinstall said.
The Investment and savings industry will be making strong
representations in its submission that GST is not in the interests of encouraging New
Zealanders to save.
Ends
Vance Arkinstall
Chief Executive
ISI
