KiwiSaver fees tax Bill withdrawn, for now

WELLINGTON: The Government has officially withdrawn the Bill which would have raised tax on KiwiSaver fees, docking people’s retirement funds by thousands of dollars by the time they retire.

The policy was intended to fix an inconsistency in the application of current GST rules, but the Government’s fix would have had the effect of pummelling KiwiSaver balances by $103 billion by 2070.

Revenue Minister David Parker said no decision had yet been made on whether the Government would seek to fix the

KiwiSaver GST issue in some other way.

The Government backed down on its proposal to add GST to KiwiSaver fees on Wednesday.

Responding to questions on the business statement ahead of question time yesterday, Leader of the House Chris Hipkins said the whole Bill had been withdrawn.

It will be reintroduced in the future without the KiwiSaver GST changes that were axed on Wednesday.

Parliament will be in recess next week.

Mr Hipkins said the tax Bill, which must be introduced and passed to set tax rates for the next year, would troduced ‘‘shortly’’.

‘‘It is absolutely the Government’s intention to introduce a taxation annual rates Bill and that will be done very shortly,’’ he said.

It is not yet clear how the bill would deal with the overarching GST problem.

Prime Minister Jacinda Ardern yesterday defended the Government’s attempts to introduce the tax on KiwiSaver fees.

Speaking during a visit to Marlborough yesterday, she said KiwiSaver was incredibly important to it as a Labour government.

‘‘It was a Labour government be reinthat brought it in,’’ she said.

‘‘We don’t want to do anything to undermine that.’’

It was an attempt to ‘‘even up the playing field for fund managers’’, Ms Ardern said.

‘‘The very strong feedback we got was that they did not believe that’s what it would achieve. ‘‘We heard that, we listened.’’ The Government did not want to ‘‘undermine the basic premise of KiwiSaver’’, she said.

‘‘We want people to know it’s there for them to support them in their retirement.’’ —