Surtax cut only ‘5 p.c. of revenue’

Press, 6 September 1989, Page 2

Surtax cut only ‘5 p.c. of revenue’

By

PATTRICK SMELLIE

in Wellington

Halving the superannuation surtax for approved pension schemes will cost the Government only about 5 per cent of the revenue it collects from the surtax, according to Treasury figures released yesterday. The change is trumpeted in Government advertisements explaining the move from national superannuation to a

guaranteed retirement income. The change, announced in the Budget, means that those paying surtax on income earned by an approved private pension scheme will, pay surtax at half the normal rate of 20c in the dollar. But it will cost the Government only $2O million in the next financial year. This compares with a potential $325 million it could expect to collect in the next financial year, if no change

had been made. In 1991-92, the Treasury forecasts expect lost revenue to the Government from the surtax halving to come to $25 million, compared with total forecast collections of $321 million. A Treasury spokesman said this reflected the relatively small proportion of surtax paid on pension scheme income. Much of the income touched by the surtax related to earnings by pensioners who were still in

the work force and income derived from investments other than in pension schemes. The Opposition has criticised the Government’s move, saying it discriminates in favour of a particular type of income provision. Many sectors of the elderly population, particulary women, did not have savings in pension schemes, and could not benefit from the surtax reduction.