More Tax Increases Needed To Keep System 'clean'Revenue
Revenue Minister Bill English said today that Labour would have to raise the tax rate on employer contributions to superannuation schemes to keep it in line with a higher personal tax and fringe benefit tax rate.
"Last week Dr Cullen admitted that Labour would raise the fringe benefit tax rate to keep it in line with the top personal tax rate and to avoid tax evasion.
"He wants to keep the tax system 'clean' and that means he is going to have to raise the tax on employer contributions to superannuation schemes or we will see money diverted into these schemes as a way of avoiding the top tax rate. A neutral or 'clean' system means investment dollars go where the returns are best, not where the tax rate is lowest.
"Employer contributions to superannuation schemes are directly comparable to fringe benefits and the tax rates need to be in line. Otherwise, employers will have an incentive to pay more into these schemes even though their employees may prefer to save in other ways.
"Once again, this tax increase would hit all taxpayers, not just those who earn over $60,000," said Mr English.