16 Nov 2012

Shake-up the tax system, says BNZ head

7:13 pm on 16 November 2012

BNZ Bank chief executive Andrew Thorburn says the nation's tax system needs a shake-up.

Mr Thorburn gave a speech on money to the Trans-Tasman Business Circle in Auckland on Friday.

He says that in the long-term the business sector needs to drive jobs, growth and income, with a strong banking sector, and a rise in savings.

Mr Thorburn says the tax system currently favours investment properties and this needs to change.

"Business leaders need to step out and start to articulate the environment that they see and the settings they need in New Zealand to enable their businesses to capitalise on the potential," says Mr Thorburn.

The nation has a strong, well-regulated banking sector, but households, businesses and governments do not save enough of their income.

"Part of that is culture and bad practice," he says. "But ... we need to make some changes to things like the tax system and things like superannuation to be able to drive the savings agenda that we need".

New Zealand also has a problem with housing affordability, which affects both families and the potential employees of businesses.

The balance of the tax system does not provide sufficient incentives for savings, and investment, but does encourage investment in residential property, he says.

A capital gains tax was one potential option but would not necessarily be a silver bullet.