Labour view on premiums row

Press, 3 May 1984, Page 26

Labour view on premiums row

PA Wellington Ending tax concessions for new life insurance policies, as the Prime Minister had threatened, was simply a way to raise money, the Labour spokesman for the Govement Life Office, Mr David Butcher, said yesterday.

Mr Butcher said that with an ever-growing Budget deficit and “a Government desperate to raise revenue, the manufactured dispute with the insurance companies is an ideal smokescreen behind which the Prime Minister can hide.” Sir Robert Muldoon said on Tuesday the Government would consider cutting the tax deductibility of new life insurance policies in this year’s Budget if the companies did not lower interest rates on farm and commercial mortgages.

“The Treasury has advocated this course of action for years. The McCaw committee (on tax reform) ... estimated that the exemption was worth $2OO million a year in lost Government revenue.

“The committee also suggested that consistency with other forms of saving should lead to the abolition of this exemption. “However, if it is the desire of the Government to encourage savings, the McCaw committee recommended that all contributions should be tax exempt, and all receipts on maturity should be taxable.

“The Prime Minister should come clean and admit that his threat to end tax concessions for new life insurance policies has nothing to do with interest rates but is simply a revenue measure.”