Various changes to tax and related rules come in to effect today, along with a derisory rise in the minimum wage the main effect is that of “Earners squeezed by tax changes“. What also strikes me about the changes is the amount of dithering involved. Here’s the government on KiwiSaver contributions in 2008:
￼Currently, the minimum employee contribution is 4% of gross salary. For many people, especially in tight economic times, saving 4% of gross salary is simply not possible and would put unwarranted strain on other parts of the family budget. These people are, therefore, effectively shut out of KiwiSaver. …
National will introduce a contribution rate that both employees and employers can realistically afford when economic times are bad as well as when they are good, and ￼during periods of their lives when they earn more than other times.
From 1 April 2009, the minimum contribution rate for employees in KiwiSaver will be 2% of gross salary.
And here they are today:
From next Monday, the minimum employee contribution rate will rise from 2 per cent to 3 per cent. ….
“KiwiSaver continues to be a popular savings options for a growing number of New Zealanders,” he [Dunne] says. “It is part of the Government’s wider programme to encourage genuine savings and reduce the need for extra government borrowing and debt.
“We believe that most people will find 3 per cent contributions affordable, and the employer contributions will continue to offer an attractive rate of return for the money employees put in themselves.
I look forward to next budget when these geniuses will no doubt propose the brilliant plan of raising the minimum contribution to 4%. Similarly on student loans. The Nats had the bright idea of an early repayment bonus which they introduced in 2009…:
The Government is introducing a ten per cent bonus for people who make voluntary repayments on their Student Loan. The aim is to encourage borrowers to repay their loans sooner. Shorter repayment times mean young New Zealanders will be debt free earlier.
… and just axed again…
Student loan tax loophole to close
Students eligible for a 10 per cent return on voluntary repayments on their student loans have only a couple of days to claim before the Government closes the loophole.
National can dither dither dither all they like with the small stuff. As long as their whole economic philosophy and major policies are wrong, they’ll continue to make a mess of the economy.
(For the record, I think the Nats were wrong to reduce Kiwisaver in the first place, so the increase is good, and they were right to introduce the student loan bonus, which they should have kept.)