Targeting KiwiSaver fund providers with GST is a policy that actually made a lot of financial sense, most parties say
The Government’s decision not to go ahead with a proposal to standardise the application of GST to fees and services of managed fund providers is being celebrated by the National Party.
Backed by sensationalist media, National launched a petition against the proposal which got 24,000 signatures. The party argued the policy would wipe $103 billion off the value of New Zealanders’ KiwiSaver savings, though they neglected to point out that this was in 2070 and is based on Kiwisaver balances being $2.2 trillion instead of $2.3 trillion that year.
Unfortunately this misleading argument had people believe their savings would have been taxed under this legislation. This is not true, with Revenue Minister David Parker saying it would have removed a loophole used by large financial companies, so they would have to align with how others in New Zealand pay GST.
The move would also have brought New Zealand fund managers more into line with the approach in Australia.
With the Government’s costs rising, this was a fair way to make up revenue from one of the few sectors that has performed well over the last few years.
The ACT Party agrees that the policy had merit.
“It was not a tax on Kiwisaver contributions or balances. It was not a new tax, we’ve had GST since 1986. The only change was applying it to Kiwisaver fund managers. GST applies to the services rendered by plumbers and hairdressers, so why should fund managers be exempt, under a fair system?”
Green Party finance spokesperson, Julie Anne Genter says it was hypocritical of National to oppose this policy when it was their government which introduced a new tax on employer contributions to KiwiSaver in 2011.
They were also responsible for the cuts made to KiwiSaver incentives.
“It was National that halved the annual maximum Government contribution to KiwiSaver accounts from $1,042 to $521.
“It was National that removed the $1,000 kick-start people were provided when they opened a KiwiSaver account.”
It is not too late for the Government to reverse these cuts, Genter says.
