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Campaign calls for lower tax on savings

People will be encouraged to let their MP know they want lower taxes on savings as part of a new campaign.

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A campaign calling for lower taxes on term deposits and Kiwisaver is being launched today.

The Fair Tax for Savers campaign, which is led by the Financial Services Council, wants the inflation component of interest to be excluded from tax.

The campaign encourages people to write to their MP asking for lower taxes on savings and has the support of Consumer New Zealand, Age Concern and the Taxpayers’ Union.

Consumer New Zealand chief executive Sue Chetwin welcomed a conversation about the way investors are taxed.

“Many New Zealanders save in term deposits, the most cautious investment. And there are good reasons for this – it suits the stage of life for many,” Ms Chetwin said.

“But it is clear these savers are carrying the burden of paying tax for other investors, many of whom are not paying tax at all. This is not because these other investors are hiding income from the IRD, but because the tax system does not treat important types of investment income as taxable.

“The burden borne by investors in term deposits and other fully taxed investments is unfair and economically damaging. We welcome this initiative because it brings to light this very important issue.”

Financial Services Council chief executive Peter Neilson said 750,000 adults had term deposits and the average amount of $132,000.

“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,” Mr Neilson said.

For more information visit fairtaxforsavers.org.nz.