Tax proposal ‘irresponsible’

Press, 23 February 1989, Page 6

Tax proposal ‘irresponsible’

NZPA Wellington Reintroducing tax deductibility for life insurance and superannuation would cost the Government about $5OO million a year in revenue, the Minister of Finance, Mr Caygill, said yesterday. Mr Caygill told Parliament that when a study was done in 1980-81 it was calculated it would cost $2OO million in revenue. In today’s terms that is just under $5OO million. He said it was irresponsible for the National Party to promise to reintroduce tax deductibility for those items. To make up for the loss of that $5OO million, a National government might make cuts in areas such as

health and education. The Opposition spokeswoman on finance, Miss Ruth Richardson, said last year’s report to the Government on retirement income said that in light of New Zealand’s poor savings and investment record, it was irresponsible to abolish the deduction for contractual savings for private income in retirement. Mr Caygill said a switch to that system would mean those receiving pensions and lump sums from superannuation should be taxed on receipt. “That will come as a very interesting policy proposal to those who currently receive those tax free,” he said.