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.

Ends


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Voluntary Administration: Renaissance Brewing Up For Sale

Renaissance Brewing, the first local company to raise capital through equity crowdfunding, is up for sale after cash flow woes and product management issues led to the appointment of voluntary administrators. More>>

Elsewhere:

Approval: Northern Corridor Decision Released

The approval gives the green light to construction of the last link of Auckland’s Western Ring Route, providing an alternative route from South Auckland to the North Shore. More>>

ALSO:

Media Mega Merger: Full Steam Ahead For Appeal

New Zealand's two largest news publishers have confirmed they are committed to pursuing their appeal against the Commerce Commission's rejection of the proposal to merge their operations. More>>

Crown Accounts: $4.1 Billion Surplus

The New Zealand Government has achieved its third fiscal surplus in a row with the Crown accounts for the year ended 30 June 2017 showing an OBEGAL surplus of $4.1 billion, $2.2 billion stronger than last year, Finance Minister Steven Joyce says. More>>

ALSO:

Mycoplasma Bovis: One New Property Tests Positive

The newly identified property... was already under a Restricted Place notice under the Biosecurity Act. More>>

Accounting Scandal: Suspension Of Fuji Xerox From All-Of-Government Contract

General Manager of New Zealand Government Procurement John Ivil says, “FXNZ has been formally suspended from the Print Technology and Associated Services (PTAS) contract and terminated from the Office Supplies contract.” More>>