MEDIA RELEASE
FOR
IMMEDIATE RELEASE
23 June 1999
AD HOC CHANGES TO TAX SYSTEM NOT THE ANSWER
The Investment Savings & Insurance
Association would not support moves to fund tax cuts by increasing the rate of GST Chief
Executive Vance Arkinstall said today.
"There are major problems and inefficiencies
with the current taxation system, which will not be addressed by this ad hoc change. We
applaud any moves to reduce personal tax levels but these should be considered only as
part of a comprehensive review and reform of our taxation system," said Mr
Arkinstall.
"The current system is widely acknowledged
as containing a raft of disincentives and inequities and changing the rate of GST will do
nothing to solve these.
"Companies operating in the savings
industry, for example, do not compete on a level playing field with other investment
options and there are currently a number of taxation anomalies that act to discourage
savings. These issues must be addressed as part of a general review," Mr Arkinstall
said.
"New Zealand faces a significant structural
problem of too much investment in residential housing and too little savings. Last
Friday’s confirmation of a growing current account deficit is evidence of our
reliance on other countries’ savings to fund current needs. We need to see positive
steps taken by the Government to encourage increased savings, which benefit individuals
and the country as a whole."
"We urge politicians to place increased
importance on the need to remove savings disincentives which will increase savings levels,
improve our serious current account position and reduce New Zealanders reliance on New
Zealand Superannuation as their sole source of retirement income."
The ISI last year released the ISI Report on
Retirement Savings: A Wake-Up Call, which identified the importance of a stable policy
framework to ensure NZ Super was sustainable and affordable over the long term. An
efficient taxation system was one of six key policy areas that the ISI recommended the
Government take action in.
"Simply increasing GST to fund lower
personal tax rates without other major taxation reform will not solve the fundamental
problems that beset our economy and which will only be aggravated as baby boomers begin to
retire in the next 10-15 years," Mr Arkinstall said.
Ends
Vance Arkinstall
Chief Executive
ISI
