Any thoughts the Government may introduce a proxy rate for managed funds following the defeat of the taxation of life insurance and superannuation (Tolis) tax credit legislation have been scuttled.
Any thoughts the Government may introduce a proxy rate for managed funds following the defeat of the taxation of life insurance and superannuation (Tolis) tax credit legislation have been scuttled.
Following the Government's failure to get the tax credit regime through Parliament recently, the Investment Savings and Insurance Association (ISI) and Armstrong Jones managing director Paul Fyfe have called for the government to introduce a proxy tax regime.
A proxy regime was the ISI's preferred fix to the problem, and the Government had said in a press release in July, that "if it proves that the tax credit option cannot be made available for the year commencing April 1, 1998, a flat rate lower than 33 per cent will be adopted temporarily until the tax credit option is available."
Fyfe says, "the government should now deliver on that promise (to introduce a proxy rate)."
However, Birch says no. He says that the proxy regime was only going to be used as a short-term measure if the Government had delays getting the tax credit legislation in place.
Since the legislation had been defeated, as opposed to delayed, the proxy regime is not an option.
He is "strongly opposed" to the proxy rate as it offers "a major tax privilege to the most wealthy savers while at the same time overcharging lower income earners."
The tax credit option remains part of the National party's policy, he says.
Fyfe, who lobbied vigorously for Tolis, says the industry has wasted three years on this issue.
He is particularly angry that New Zealand First did two U-turns on the matter and, likewise, the ACT party didn't support it for political reasons.
NZ First leader Winston Peters told a superannuation conference last month that, although Tolis was introduced when he was the Treasurer, "Tolis was never my policy".
He supported it at the time, he says, as in coalition political parties have to make compromises, and this issue was something, "I didn't want to have a row about".
"I regret telling people we supported it," he said.
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Any thoughts the Government may introduce a proxy rate for managed funds following the defeat of the taxation of life insurance and superannuation (Tolis) tax credit legislation have been scuttled.