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Taxing Options Require Careful Examination

16 November, 2004

Taxing Options Require Careful Examination

"Craig Stobo's report on the taxation of investment income is a helpful step in developing policy in a troublesome area," Roger Kerr, executive director of the New Zealand Business Roundtable, said today.

He was commenting on the release of the report, Towards Consensus Taxation of Investment Income, prepared for the minister of finance by Craig Stobo.

Mr Stobo was asked to consider options for making the tax law more consistent between direct and indirect portfolio investment so as to improve the efficiency and fairness of taxation of savings.

"The report states that there is significant momentum for change. However, more certain and enduring tax arrangements that enhance efficiency will only be achieved if the changes proposed are sound and fully considered.

"Mr Stobo correctly reported that flattening the tax scale was an "economically sound" option that would address some of the difficulties. This option was not examined because it was outside of his terms of reference. The McLeod report also advocated a flatter scale. This is the best solution to many of the problems of the present tax system.

"The report outlines options but the details need to be developed further and their interrelationship with other areas of the tax system require very careful examination before decisions are taken", Mr Kerr said.

ENDS

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