Policymakers in the countries of the Organisation for Economic Co-operation and Development (OECD) could simplify the tax system and encourage savings, with the aim of strengthening the financial security of low- and middle-income households, according to the Tax Foundation think tank in its latest study, published on Thursday 22 February.
To encourage long-term retirement savings, countries generally grant tax advantages to private retirement accounts. They generally provide tax exemption for the initial amount of the principal investment and/or for the income from the investment.
However, in many countries, the system of tax-preferred retirement accounts is complex, which can discourage savers from using these accounts and potentially reduce overall savings.
Tax-preferred private retirement accounts often come with complex rules and limitations. Universal savings accounts could be a simpler alternative - or a complement - to the current system of private retirement savings accounts in many countries, according to the Tax Foundation.
Canada and the UK, for example, have introduced universal savings accounts, providing an example of simplifying the system of tax-preferred retirement accounts while offering greater flexibility in the use of funds.
Read the study: https://aeur.eu/f/az0 (Original version in French by Anne Damiani)