Cullen dashes hopes for super incentives
Finance Minister Michael Cullen says the government doesn’t have enough money to provide “sweeteners” to encourage workplace savings.
Thursday, February 17th 2005, 6:45AM
by Rob Hosking
The Workplace Savings Group, chaired by former Cullen economic adviser Peter Harris, last year suggested a number of ways to encourage superannuation schemes in the workplace.
Part of that involved providing “sweeteners” for people who join workplace based savings schemes. Suggestions included tax concessions, or the government running the administration of such schemes through the Inland Revenue Department.
However Cullen yesterday told MPs on Parliament’s finance and expenditure select committee the government cant’ afford much in the way of incentives.
“What Peter Harris was indicating in that report was that if we are looking at some form of locked in savings…we’ve really got to look at things like tax deductibility, or other changes.”
However Cullen says the government is “not necessarily” looking at locked in savings, and no final decisions have been made.
And in terms of any incentives; “There is a fiscal problem.”
“When tax deductions for superannuation and life insurance were abolished in 1985 that, from memory, brought in the government an extra $800 million a year. That was by no means a huge tax deduction, but if you scale that up from 1985 you’ll get an idea of how much it might cost.”
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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