The report makes a number of recommendations aimed at increasing New Zealand’s total national savings to reduce this economic vulnerability, including a number of tax recommendations:
- Inflation indexing interest income and expense.
- Reductions to PIE tax rates to target an effective tax rate on savings of around 5 to 10% below investors’ marginal rates and extension of PIE tax rates to other types of savings income (e.g. dividends and interest).
- Continuing the switch from income tax to GST (e.g. increasing the GST rate to 17.5% accompanied by compensating income tax and benefit changes).
The attached taxmail discusses the SWG recommendations in greater detail.