Taxes on savings accounts 'should be cut'

The government should encourage people to put more money into their savings accounts by cutting taxes, it has been suggested.

Westpac chief executive officer Gail Kelly said more needs to be done to drive cash into deposit accounts – potentially including term deposits.

She said this could include a consideration of savings incentives in the upcoming tax review by Ken Henry, head of the Federal Treasury.

According to the Daily Telegraph, Ms Kelly pointed out that Aussies, on average, borrow twice what they save.

She said this was a fundamental cause of the recession, as many banks had to fund customer borrowing – including home loans – through offshore funding.

"We are not going to go back to the world as it was before," she remarked.

Ms Kelly went on to add: "We need to incentivise and drive additional savings as a nation."

Consumers may be more inclined to save their money now that ANZ has eliminated the charges on some of its savings accounts.

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