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.”