Hints on timing of big tax cuts

Press, 14 November 1984, Page 8

Hints on timing of big tax cuts

PA Wellington ' The size of big income tax cuts to apply from 1986 will be known late next year, says the Minister of Finance, Mr Douglas. He plans to return to the normal June-July Budget next year, but the personal income tax cuts, to coincide with the application of the goods and services tax in April, 1986, were more likely to be published later in the year, possibly October. ■ • New business taxes could also be phased in at the time of the 1986 restructuring, Mr Douglas said. ' < A main review of business taxation, including the possibility of a wealth tax, is now under way. Mr Doug-

las said there was no guarantee the study would be completed in time for the 1986 Budget. The tax-deductibility of existing life insurance and superannuation policies — which escaped the axe in the Budget — could also be altered in 1986 if the survey was not completed in time for next year’s Budget. The tax-deductibility of new policies was removed in the Budget, .but Mr Douglas left existing policies untouched. He said discussions would be held with the industry to achieve a more rational taxation regime and appropriate phase-out arrangements. Those discussions would be held over the next six months. “It is not just the question

of tax-deductibility of existing policies. What we will really be looking at is the wider issues of the taxation of superannuation schemes, life offices — the whole area. “It is very complex and we want to ensure that there is fair treatment of all types of superannuation and that one particular form does not achieve an advantage over another.” There was ho deadline for the completion bf this study. In 1986, Mr, Douglas said, there would also be a much closer marriage between the social welfare system and the tax system “so that there is not the disincentive to people to move out of the situation where they are on a benefit and into the workforce.” , . ~