"We recognise there is still a lot of detail to be addressed before implementation in 2007, and we have some concern that existing savings schemes should not be disadvantaged relative to KiwiSaver. Such a circumstance could lead to in an element of dis-saving as existing schemes considered transferring their investors. Under current rules, this would result in returning savings to investors and we doubt that all this money would make its way into the new KiwiSaver scheme. No doubt Dr Cullen is considering this issue", said Tony Hildyard, CEO Investment Businesses.
Tower also believes that KiwiSaver would gain more initial momentum if the realigning of tax brackets, currently slated for 2008, were brought forward and coincided with the implementation of KiwiSaver.
Tower is similarly supportive of Dr Cullen's intention to put managed funds on the same tax basis as direct investments and views this as a significant improvement over the current regime, particularly for domestic equity collective investment vehicles. However Tower is concerned that the changes create an apparent tax bias in favour of domestic shares through collective investment vehicles, relative to international investments and this needs to be thought through carefully.
"For too long, many New Zealanders personal investment decisions have often been based on a tax regime that favoured some types of investments over others. "This has frequently led to highly concentrated, unstructured and uninformed investment decisions that go against the principles of diversification", said Hildyard.
A more level tax environment for investments will allow investors to take advantage of professional investment advice and products, properly structured for efficient long-term investment growth.
Tower looks forward to working with Government and other industry parties to ensure the smooth implementation of these initiatives.
This is a media release from TOWER New Zealand
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