Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Government misses prime opportunity says expert

Government misses prime opportunity says expert

A leading tax specialist says the government has missed out on an important opportunity to help New Zealanders save for their retirement.

Roger Thompson, a director of New Zealand's leading independent accounting firm, Staples Rodway, says the Kiwisaver scheme, while a step in the right direction, is only likely to have minimal success.

" Without a significant ongoing incentive or element of compulsion few will choose to remain in the scheme. Although the $1,000 government kicker initially appears attractive, generally the saver will have to wait to age 65 to receive it," he says.

"There are unlikely to be many on lower incomes who can afford the 4% minimum contribution. The scheme is likely to appeal more to those wanting to buy a new home than those saving long term for retirement. An ongoing tax incentive would have been more effective.

However, Mr Thompson says the " look through" approach to collective investment vehicles - whereby income is taxed at the investor's marginal tax rates- is a step in the right direction but again is unlikely to be hugely effective.

" It simply removes a disincentive that currently exists. It only benefits people with incomes under $38,000 many of whom are unlikely to have significant funds available for saving."

Mr Thompson says the increase in personal tax thresholds are "a joke" given that they don't apply until 1 April 2008.

" When the 39% rate was introduced the government said it would only apply to 5% of earners, it now seems about 12% are caught and this will only increase by 2008."

"There appears to be no good reason why the changes couldn't be implemented by 1 April 2006. It is notable that the Australian tax cuts kick in more immediately," he says. Many Australians will be paying significantly lower taxes than New Zealanders.

Mr Thompson also noted that no change to the company tax rate is proposed which is 3% higher than the Australian tax rate.

"Rather than cutting taxes, the government is increasing taxes with the new carbon tax and capital gains tax on overseas shares. There are also other revenue-grabbing measures in the new Tax Bill introduced on budget day such as bringing forward the date for paying provisional tax and GST and taxing 9 to 5 leases"

"All in all, I would say this is a budget which hasn't really delivered much," says Mr Thompson.


© Scoop Media

Business Headlines | Sci-Tech Headlines


I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>


Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>


Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>


Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>


Half A Billion Accounts, Including Xtra: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>


Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news