KiwiSaver fee tax: Government reintroduces tax bill without widely criticized changes
Legislation bringing about the change, which also contained many other provisions bringing order to the tax law, had to be withdrawn from the House – just two days after it was introduced
A statement from Revenue Minister David Parker confirmed on Thursday that a new version of the legislation has been introduced, but this time without the proposal to apply GST to managed fund provider fees.
“The Taxation (Annual Rates for 2022-2023, Platform Economy and Remedial Matters) Bill (No. 2) will be referred to a select committee for consideration and submission, and will be passed by March 31 2023,” the statement read.
“This is an annual bill that confirms tax rates for the coming year and brings order to the tax laws. The bill contains more than 190 provisions amending the tax laws spread into 9 main measures and a series of corrective amendments.
Parker released a statement when the first bill was introduced, but he didn’t mention anything about the KiwiSaver fee proposal. He did, however, mention a new requirement for “digital platforms to collect GST on carpooling, food and drink delivery, and short-stay and visitor accommodation provided in New Zealand.”
Prime Minister Jacinda Ardern conceded to AM on Monday that the government should have been more transparent, but said she had no intention of hiding the proposal.
“[Parker] was of course making judgments about what he thought was in the most public interest. Look, that should have been included, there were a number of other things that should have been included, so I’m not going to argue with that.”
When Parker announced the rollback – less than 24 hours after the bill was introduced – he said the proposal was intended to create a level playing field, forcing large fund providers to pay GST on fees, which small providers are already doing.
“During extensive consultation, opinions were divided on the merits of the technical change,” he said.
“Larger companies that were taking advantage of the current setup were opposed to change, while smaller vendors were more supportive of change. Indeed, those suppliers who charged the full GST on their service fees faced unfair competition from the bigger players.
“However, since the announcement, it has become clear that smaller suppliers are also opposed.”
The Minister admitted the reversal was mildly embarrassing, but felt public outrage had been sparked by what he called a misrepresentation of the proposal. Parker said some comments suggested the tax was on KiwiSaver contributions, rather than fees.
The National Party welcomed the U-turn.
“They can dress it however they want. The reality is that it was a tax on hard working Kiwis and their KiwiSaver and their retirement income. That’s not acceptable and that’s fine. let this be stopped,” executive Christopher Luxon said.
While the last national government made changes to KiwiSaver, including imposing a tax on employer contributions and dropping the $1,000 kick, National Finance Party spokeswoman and deputy leader Nicola Willis , ruled out making any changes to it if she were finance minister.