So, the rumour is that Kiwisaver will be slashed to fund National’s tax cut policy. Currently, the Government spends up to the following on each Kiwisaver member:
– $1000 on sign-up
– Up to $1040 a year in matching contributions
– Up to $1040 a year in tax credit to employers
– 30% tax deduction for any employer contribution above $20 a week (which applies to virtually no-one at present)
– $40 a year to cover fees.
There are 750,000 members of Kiwisaver, after the first year, the Government is spending around $40 a week on each of them. So, could taking that away fund tax cuts?
There are 3 million taxpayers who earned an income last year. If we were to take the $40 a week off each Kiwisaver and divide it equally among the 3 million taxpayers, they’d get a grand total of $10 a week each. That’s against public expectations of at least $20 more a week and promises of “north of $50 for the average worker” from Key. Either employers would be lumped with paying the entirety of the employer contribution or, more likely, the employer contribution would be scrapped. The 750,000 Kiwisavers would be $30 plus a week worse off. Kiwisaver, a highly successful savings programme that is boosting our low savings rate, injecting money into our capital markets, and attracting attention from policymakers abroad, would be destroyed.
Sounds like a pretty steep price to pay for 667 grams of Mainland Mild a week.
Update: some reckon the Nat plan is that they extend the Government contribution payments to all non-Kiwisaver taxpayers, all 2.25 million of them. $20 a week to 2.25 million people – that’s $2.3 billion a year. Where’s that money coming from? $2.3 billion out of thin air. And those people who in good faith have taken up Kiwisaver get nothing. Nice.