Campaign to reduce savings tax

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New Zealand has some of the highest taxes on retirement savings anywhere in the world, those behind a new campaign to lower them say.

Thursday, July 31st 2014, 10:28AM 1 Comment

The FInancial Services Council, Age Concern and Consumer NZ have joined forces to lobby MPs to cut taxes on long-term savings.

They have launched a website for people to email MPs and will be inserting post cards into print media for readers to send to parliament.

The campaign aims to highlight and change what the group describes as some of the highest tax on retirement savings anywhere in the world.

Financial Services Council chief executive Peter Neilson said long-term savers, such as those in KiwiSaver, would lose about half their earnings through tax.

He said those in term deposits were also overtaxed.

If the tax structure were changed, KiwiSavers could amass more than $100,000 extra in their retirement nest eggs, he said.

"And, for people with term deposits, if we taxed only the real income from interest a retired New Zealander with a $100,000 bank term deposit would have their retirement earnings boosted by more than $19,000 over 25 years."

The Fair Tax for Savers Campaign is asking all political parties to consider:

• Making the effective tax rates paid on KiwiSaver funds the same as the marginal income tax rates KiwiSavers would pay on their other income
• Taxing term deposits only on the real interest rate (actual interest rate less the rate of inflation) rather than the nominal interest rate (the actual interest rate you receive) as the compensation for inflation is not really economic income.

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