Handling of tax moves criticised

Press, 9 March 1988, Page 42

Handling of tax moves criticised

SEAN KENNEDY

PA Wellington

The Government’s handling of its tax reform package has drawn sharp criticism from the Government Life Insurance Corporation.

Government Life’s chairman, Mr Henry Lang, who is also a former secretary of the Treasury, has charged the Government with failing to consult properly on the elements of the package, delivered in December and amended in last month’s corporate and personal tax announcement.

Mr Lang said he sup-' ported the general thrust! of the reforms, but had; reservations about the? way they were being implemented. . “We are not just having speed wobbles as (Deputy Prime Minister) Geoffrey Palmer says but we are? facing a major policy making failure.” Mr Lang said.

"Consultation is clearly inadequate. Changes are

announced and some of them are made effective immediately from the date of the announcer ment.”

Insufficient considera L tion was given to the implications of the reforms, he added. Mr Lang also questioned the worth of a consultative document oh superannuation, due to be

released soon, predicting it would offer no change for real input. The document would probably just set out draft legislation, much of which would be retrospective. "I I believe the way policy is currently being made is a serious breach of our constitutional conventions about retrospective legislation...

about consultation and both of these are fundamental to our democratic process.”

Mr Lang said superannuation reform was clearly needed, but the New Zealand approach was out of line with such other OECD countries as Australia, the United Kingdom and the United States. New Zealand was the only OECD country which taxed deductions rather than the pensions and also the only one which had no specific levy for social security making it questionable whether it would be able to fund all social

services. Mr Lang proposed a mandatory scheme which would be similar to the New Zealand Superannuation Scheme but would not involve a large State administered fund. Individual contributors should be able to select the insurance company and superannuation package which met their requirements. In its first annual report since the Government Life Insurance Corporation Act came into effect last April, the company reported a 21 per cent increase in policy holders’ funds to $1507 billion from $1242 billion in 1986. Of the total funds at September* 30, 1987, $BBl million is invested. in fixed interest deposits ($7BO million) $605 million in shares ($238 million), $213 million in property ($lB2 million) and $5.9 million elsewhere ($4.8 million). Borrowings increased more than 200 per cent to $252 million ($B2 million).