Majority of KiwiSaver users would be better off if all Tax Working Group’s proposed changes implemented - expert

The majority of New Zealanders would be better off via their Kiwisaver funds if the Government passed all the Tax Working Group’s proposed changes, an expert says.

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It was important to look at the four things that will affect KiwiSaver funds as a package, Simplicity New Zealand’s Sam Stubbs said. Source: Breakfast

Simplicity New Zealand managing director Sam Stubbs said it was important to look at the four different things that will affect Kiwisaver funds as a package.

"When you look at it that way it’s actually very, very good for Kiwisaver members who are going to be on about $62000 or less," he told TVNZ1's Breakfast today.

"To use some numbers here just as an example, if you earn $40000 and were in a growth fund your whole life ... you’d be about $100,000 better off when you retire."

"Then it goes down to, if you’re earning a $100000 you’d actually be about $13000 worse off."

"What’s interesting about that is that impacts a lot of New Zealanders but when you think that most New Zealanders will pretty much own their house and their second biggest asset will be their Kiwisaver."

The question of fairness came down to your personal beliefs, Mr Stubbs said.

"A lot of people were very focused on how it taxes assets for the rich and passes that back to people that get less well paid off but I think overall the purpose of a capital gains tax pretty much all around the world is to redistribute income."

"That means the wealthy pay a little bit more, the less wealthy pay less and win and it seems to us that if you have a look at that via Kiwisaver that’s one of the ways they’re doing it, this is an income redistribution mechanism as much it is a tax on assets."

"Fairness is the really big thing for Kiwis right, if you believe that fair is that the rich should pay some more in tax and the less well-off should be pay less then it’s fair in that sense."

Mr Stubbs said "any government that increases tax rates becomes pretty unpopular pretty quickly" and he expected the Government to give tax breaks to New Zealanders on lower incomes.

"Everyone’s jumping to the gun a little bit too early, they haven’t made any commitments here, they’ve said they’ll look at the proposals and they’ll judge them."

"I’d be very surprised if they just put the tax on, I think that would be extremely unpopular, I think you would expect to see some tax breaks particularly for lower earning New Zealanders as well."

"I think the Government really needs to make up their mind, is this the way of getting income from the wealthy to the less well off or should they do it in a simple way, just by changing tax rates?"