Changes to tax concessions?

Press, 3 August 1985, Page 1

Changes to tax concessions?

PA Wellington A move away from a concessionary tax regime for life insurance and superannuation would seem consistent with the Government’s aim of a fairer, more efficient tax system, said a Parliamentary Under-Secre-tary yesterday. The present concessions had given those industries a competitive advantage over other financial intermediaries, said the Under-Secre-tary of Trade and Industry, Mr Neilson. “This means that life offices and superannuation schemes do not have to provide the best pre-tax return to attract the saver’s dollar,” he said. He emphasised that no final decision had been taken on the final form of taxing either superannuation or life insurance. A discussion document was being prepared and submissions would be invited before any policy

changes were made, he said. Mr Neilson said life offices and superannuation schemes were able to sell their savings plans on the basis of their tax advantages. Unlike a bank or building society they did not have to rely on their ability to provide at the lowest possible

cost the services borrowers and savers demanded in order to attract business. “It is arguable that this competitive advantage enjoyed by life offices and superannuation schemes has reduced the efficiency of the financial sector,” he said. A more even-handed tax and regulatory treatment would enable other financial institutions to compete on a more equal footing. However, he said the Government needed to look not only at the arguments for a more even-handed tax treatment but to ensure any changes did not replace one distortion or inequity with even greater ones.