31 March 2011
National Australia Bank Executive Director of Finance, Mark Joiner has today called for the tax treatment of deposits and a fairer deal on tax for Australian savers to be high on the agenda at the upcoming Tax Forum.
Speaking at an American Chamber of Commerce luncheon, Mark Joiner said the Federal Treasurer’s upcoming Tax Forum provides an opportunity for policy makers and regulators to debate the importance of a stronger deposit market in Australia, and the benefits this would have for Australian savers, borrowers and our economy.
“Changes to the tax treatment of deposits in Australia which help develop a stronger domestic deposit market should be high on the agenda at the Tax Forum,” he said.
Mr Joiner said developing a stronger deposit market and a fairer tax treatment for Australian savers could help relieve some of Australia’s offshore funding burden and the extra pressure it can put on interest rates.
Domestic savings rates have not kept pace with credit growth.
Nearly all growth is coming from offshore. Australian bank’s foreign liabilities have increased from 7% in 1990 to 24% in 2010.
“This represents a long term structural challenge for Australia’s economy and our ability to fund economic growth, create wealth and improve national living standards,” he said.
Currently there are tax breaks in place for most asset classes - shares get dividend frankings, superannuation is taxed concessionally and property can be negatively geared. However there is no such tax support for deposits and the Australian savers who use them.
Mr Joiner said the Government’s proposal to allow financial institutions to issue covered bonds is a welcome development and a good start, however, it is not on its own the solution to the funding issues Australia is currently facing.
The Henry Tax Review advocated reforms to the tax treatment of deposits as in the national interest. It is time to make some real policy progress on this issue and the October Tax Forum is the place to do it.
Better tax treatment for Australian savers would be good news for savers, good news for borrowers, and good for Australia’s economy.
George Wright 0419 556 616
Meaghan Telford 0457 551 211