Senior citizens minister David Carter surprised delegates at a superannuation conference yesterday when he hinted the once defeated Taxation on Life Insurance and Savings (Tolis) legislation may soon be back before Parliament.
The bill was designed to fix a problem where middle and low income earners are being over-taxed on some of their savings. Currently the funds these people invest in are paying tax at 33 per cent, however their personal tax rates could be much lower.
The tax credit option was defeated in Parliament late last year when New Zealand First withdrew its support at the 11th hour.
ISI chief executive Vance Arkinstall says cabinent minister Sir William Birch and finance minister Bill English have indicated they may try and resurrect Tolis again, however he says the industry won't support such a move.
"I can't support (Tolis) as the best option," he says.
NZ First Winston Peters has hinted though that he may again support the Tolis bill. Recently he told a Financial Planners and Investment Advisers meeting in Hamilton that NZ First withdrew its earlier support because of the coalition bust-up. He indicated he may now support Tolis as it helps low and middle income earners.
The ISI's view last year was the tax credit option was a second best solution to the problem. It favoured a proxy rate system instead where funds would pay tax at a rate somewhere between 33 per cent and the lowest personal rate.
Arkinstall told the conference yesterday that "there are options to Tolis, and I don't think they have to be complex."
He says the cleanest and fairest way of tackling the issue would be to have a tax rebate system.
Labour deputy leader Michael Cullen says Tolis was too complicated and the proxy rate is "exactly the wrong thing to do".
On hearing Carter's comments, Arkinstall said: "I'll be keen to ring him as soon as I get back to the office."
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