Savings accounts 'could be made tax-free'

Savings accounts may become free of tax following a recent consultation.

The Australian Conference of Economists Business Symposium saw a panel of experts discuss the issue, according to the AAP.

Ken Henry, treasury secretary, explained that there are arguments for taxing savings accounts at a lower rate than labour, as well as subsidising them and making the rate dependent on age.

However, he pointed out that more research needs to be conducted in order to make any arguments conclusive.

Furthermore, he remarked on the possibility of savings becoming exempt from tax completely and the potential for replacing the existing system with an "expenditure tax approach".

"The income benchmark argues that people who have more wealth should pay more tax, while the expenditure benchmark argues that people who save more than others of the same labour income shouldn’t pay more tax," he commented.

Dr Henry is chair Australia’s Future Tax System Review Panel and said it would reconsider its position on savings tax – potentially including high interest savings – in its forthcoming report.

Meanwhile, it was recently claimed by Don Stammer, chair of money management firm Praemium, that a hike in interest rates would be good for people’s bank accounts since it would boost earnings on savings.

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