Dear Scoop Editor
Here is an issue of importance to anyone with a few savings that seems to have been almost totally overlooked by the media. It does not apply only to big investors but particularly to small investors: retirees, baby-boomers saving for retirement, young people saving for a home etc.
The proposed tax using the 'risk free return method' would tax savings (overseas shares and possibly other savings) on their entire value at the beginning of the tax year. If you made losses due to poor share returns, you would still have to pay tax on the initial value of the assets. Obviously, this will drive people out of investing in overseas shares. See the attached commentary:
Why isn't this proposed tax a huge election issue? Surely everyone with a few savings should be very very worried?
Dr Cullen thinks he will have a mandate:
"As I have stated previously, no proposals for significant change will be implemented without first seeking a mandate from the electorate through the 2002 general election," Dr Cullen said.
I don't think it can be called a mandate when there is simply no awareness and no discussion on this issue.
The outcry was huge when introducing such a tax on owner-occupied homes was mooted. If someone could make it clear to small investors that the threat to their savings is exactly the same, this would become an important election issue.
I hope you can help make people more aware of this issue.