Treasury still keen to look at savings vs property tax treatment debate

Treasury still keen to look at savings vs property tax treatment debate

Treasury is still keen on looking at longer term options for New Zealand’s tax system, including the difference in tax treatment between savings in bank term deposits and property investment.

The government-appointed Savings Working Group earlier this year outlined concerns that property was taxed at a considerably lower marginal rate than savings in term deposits, saying that created an incentive for property investment over other forms of savings vehicles.

Treasury deputy chief executive Andrew Kibblewhite told Parliament’s Finance and Expenditure Committee that Treasury was still interested in thinking about longer-run options around the tax system, although was not looking at specific changes to taxes on savings at the moment.

Before the May 19 Budget, Finance Minister Bill English said the government would not consider the option of indexing savings taxes for inflation, as it was too complex given the workload created for government and Treasury due to the Christchurch earthquakes.

“We’re not actively doing further work on some of the savings options that are in there at the moment – there’s some background work going on, but we’re not working on specific proposals beyond what has been implemented,” Kibblewhite said.

Asked whether the work being carried out included looking at the effective tax rate of household savings and its relationship to the effective rate of tax on property, Kibblewaite replied:

“Certainly we are looking at some of those sorts of issues.”

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What a waste of time. 

Govt won't give savers any tax advantages. They are keeping the interest rates artificially low to transfer the wealth to the borrowers. Why would they want to tax savers any less!

First decent comment from Treasury for a while.

The whole change to LAQC's etc was just a big smoke screen, that achieved nothing other than making it look like they were doing something.
But it doesn't even affect probably 95-99% of most property investors, when they just move onto LTC companies, where virtually all of them will still be able to claim the same amount back in tax returns.

It is unspoken policy WAS...govt and RBNZ will debase until the debt levels are down and stuff any fool who cannot avoid being screwed in the process. Heaps of elderly unable to understand why they are being robbed blind as their savings "earn" 2% in a bank if they are lucky...less tax and less the debasement.

They lose about one or two %  of their capital every year....

The lesson to all of us is loud and clear...if you are going to save your spare income...do so in a manner that allows you to escape the organised theft. You are better to buy the dunny rolls in bulk and stuff the shed and ceiling space with them....the return in savings will vastly exceed any interest earnings...and they make good insulation.

Buy in bulk...be part of a team and bargain down the costs...get the chookhouse up and running....did you buy a share in a "Predator"....how's the veg garden going....are we into the driftwood on the beach yet....

Bring in a land tax, but only for foreign nationals who own land in NZ. Do they vote...? The overseas Aussies and Chinese nationals gobbling up NZ (and let’s not forget the lovely Shania) can likely afford it. If they can’t then they can sell back to the Average kiwi joe, or give him a chance. Happy to consider an exemption if said foreign national moves their global taxable income back to NZ and pay their tax here...can't see that happening though, especially if you’re a US citizen.

Phase 2, target all the Kiwis and foreign residents owning land in NZ, but who work overseas and don’t pay tax in NZ. Ill bet they still want our education, welfare and medical when they need it but won’t really have contributed to the cost of those services.

I say a premium to use your non NZ tax paying incomes to buy land in little old NZ.

Go on Shania, move your global earnings to good old NZ?