fungus pudding
01-02-2011, 05:08 PM
I like them too.
English warming to tax breaks for savings :D
The government will consider lowering the tax on income from interest and other savings Finance Minister Bill English said today.
Speaking at a stand-up media briefing following the release of this morning’s Savings Working Group, Mr English said there is merit in the group’s proposal of extending the current tax status of PIE (portfolio investment entities) to other savings.
Income from PIEs is taxed at the taxpayer’s marginal rate and is capped at 28%.
“Most investors in PIEs are effectively able to access a tax rate that is either 5 or 12.5 percentage points lower than their prima facie marginal tax rate,” the report says, and it wants this extended to other forms of saving.
“Well, we won’t rule it out,” Mr English said when asked whether the government could signal a lower tax rate for savings once its budget returns to surplus. That sounded somewhat equivocal, but the finance minister went on to acknowledge that at present income from savings is taxed too highly and it amounts to a powerful disincentive to save.
“It is pretty hard on people who put money in the bank at a high tax rate compared to if you put it into a house.”
The only things the government has ruled out specifically are a rise in GST and a separate social security tax, both of which were put forward by the Savings Working Group.
The government also previously ruled out a capital gains tax.
English warming to tax breaks for savings :D
The government will consider lowering the tax on income from interest and other savings Finance Minister Bill English said today.
Speaking at a stand-up media briefing following the release of this morning’s Savings Working Group, Mr English said there is merit in the group’s proposal of extending the current tax status of PIE (portfolio investment entities) to other savings.
Income from PIEs is taxed at the taxpayer’s marginal rate and is capped at 28%.
“Most investors in PIEs are effectively able to access a tax rate that is either 5 or 12.5 percentage points lower than their prima facie marginal tax rate,” the report says, and it wants this extended to other forms of saving.
“Well, we won’t rule it out,” Mr English said when asked whether the government could signal a lower tax rate for savings once its budget returns to surplus. That sounded somewhat equivocal, but the finance minister went on to acknowledge that at present income from savings is taxed too highly and it amounts to a powerful disincentive to save.
“It is pretty hard on people who put money in the bank at a high tax rate compared to if you put it into a house.”
The only things the government has ruled out specifically are a rise in GST and a separate social security tax, both of which were put forward by the Savings Working Group.
The government also previously ruled out a capital gains tax.