Labour Finance Spokesman David Cunliffe says a Labour government would look at providing a tax break for term deposit savers, at least partly to compensate them for the permanent loss in purchasing power from the GST increase and to incentivise savings behaviour.
Australia is looking to give a tax break on the first A$1,000 interest earnings from savings accounts.
Cunliffe told interest.co.nz in a Double Shot interview that the government had given tax relief to high income earners and should have used some of that money to directly incentivise savings instead.
"It's certainly an option that we will look at, which is to look at some form of tax relief directly on savings' interest," Cunliffe said.
He also said it was time to debate the issue of compulsory superannuation contributions.
Cunliffe said the Government's May 20 budget had failed to change the savings landscape and was dishonest in the way it did not include the effect of inflation in measuring the impact of its tax changes in its tax calculator.
"For the amount that they spend on the tax merry-go-round, I thought it was a pitiful effort. They've got very weak savings incentives. They've cut in half KiwiSaver incentives. They've refused to pre-fund superannuation. There's no strong savings incentive policy there. There's no new savings products and they haven't gone near a contributory compulsory superannuation scheme," Cunliffe said.
"Labour will lead on savings policy. We are yet to release the detail on that. We will consider a staircase of options. That will include at the bottom end, new savings products that are easy and safe for Mum and Dad investors. At the mid layer it could include examination of a range of savings incentive options. At the top end we'll want to -- to quote Bill English -- 'kick the tyres' on the question of compulsory savings," he said.
"It is a debate that New Zealand needs to have. I don't know what the answers are yet. There are negatives as well as positives, but it's a debate we need to have," he said.
Cunliffe also spoke about the Reserve Bank's tightening of monetary policy this week and its interaction with fiscal policy, saying the government's loosening of fiscal policy next year made the Reserve Bank's job harder.
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