Insurance tax relief to stay

Press, 2 April 1979, Page 12

Insurance tax relief to stay

PA Wellington The Prime Minister (Mr Muldoon) has said that he firmly rejected advice to remove or lower the tax exemption on lifeinsurance premiums. io do this would create difficulties which were greatly out of proportion to any advantage to be gained, he told a Life Offices Association luncheon. "On the other hand, I think it is fair to comment that, at this stage, i is unlikely that there will be any increase in the deductibility of premiums in inis year's Budget,” Mr Muldoon said. ‘Government economic ■ nnr wi! ? he devoted to settling down present rate of activity, while at the same time encouraging the movement of resources from co»isumntion to export. “Given that statement principle, the pattern of budgetary moves this year is not too difficult to forecast.” Mr Muldoon said the Go- eminent had taken major steps in 1976 to

free up the financial sector. But three years later, partly as a result of very high but diminishing inflation rates and partly because of “in-built • rigidities,” the new, more flexible system had not fully "bedded down.” “Interest rates have remained high and although there has been some flexibility, monetary conditions in the recent past have militated against any policy action to bring them down,” he said. Mr Muldoon said the contractual aspect of life insurance remained an important part of the economy, although the role of life offices on the investment side was likely to become more difficult as the shape of the economy changed. “I would like to see equaity investment ret a position of greater respectability,” he said. “But this aim does not have the same high priority as other aims of Government policy, and progress may be’ slow until, we can get back to lower rates of inflation on a normal basis.”