Latest / Early Edition with Ryan Bridge / David Seymour: ACT Party leader on the party's plan to cut KiwiSaver taxes

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David Seymour: ACT Party leader on the party's plan to cut KiwiSaver taxes · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: ACT had their campaign launch over the weekend and now
• 0:03
  Speaker 1: they've announced that they want to scrap tax on your
• 0:05
  Speaker 1: KiwiSaver investment earnings. But there is a catch, though. They
• 0:09
  Speaker 1: want to stop all government contributions.
• 0:11
  Speaker 2: Taking tax off returns on KiwiSaver means the compounding effect
• 0:16
  Speaker 2: is multiplied to a staggering level and we end up
• 0:20
  Speaker 2: with hundreds of thousands of dollars more in our KiwiSaver.
• 0:24
  Speaker 1: So that's the voice of David Seymour and here's the
• 0:25
  Speaker 1: man himself. Good morning to you, David. Good morning. So
• 0:29
  Speaker 1: you've obviously worked the numbers. Would everyone be better off?
• 0:34
  Speaker 3: Absolutely. Over time, the compounding effect of interest gives you
• 0:39
  Speaker 3: an enormous amount more money. In order for the effect
• 0:44
  Speaker 3: of this to be less because of not getting the
• 0:48
  Speaker 3: $ 250 from the government, you'd have to be earning, you know,
• 0:53
  Speaker 3: less than $ 1, 000 in returns, which means that your balance
• 0:58
  Speaker 3: would have to be less than $ 15, 000. So if you
• 1:01
  Speaker 3: had a very small balance, maybe initially you might be
• 1:06
  Speaker 3: worse off. But if you take an example of somebody
• 1:10
  Speaker 3: who's a builder, 60 grand a year through their career,
• 1:16
  Speaker 3: they start when they're 20. By the time they retire,
• 1:20
  Speaker 3: they would be $ 210, 000 better off for not paying tax
• 1:25
  Speaker 3: on the returns. So that's not a high income, but
• 1:30
  Speaker 3: it's a reasonable income, and you still end up much,
• 1:34
  Speaker 3: much better off. Every other party wants to force you
• 1:38
  Speaker 3: into KiwiSaver and tax you for your troubles. The ACT
• 1:41
  Speaker 3: Party will let you choose, but will give you less
• 1:44
  Speaker 3: tax if you save in KiwiSaver.
• 1:45
  Speaker 1: And let's remind everybody, this is what Australia does.
• 1:49
  Speaker 3: Well, you're right, and it's what most countries do. New
• 1:54
  Speaker 3: Zealand has been an outlier in that we tax contributions
• 1:59
  Speaker 3: to retirement savings. We tax your returns while you're in
• 2:05
  Speaker 3: the scheme, and then we exempt your money when you
• 2:08
  Speaker 3: take it out. They call that a TTE, tax exempt tax.
• 2:14
  Speaker 3: Most countries are a TEE, tax your contributions, exempt your
• 2:20
  Speaker 3: returns and exempt your withdrawals. This will bring us into
• 2:23
  Speaker 3: line with Australia and most countries.
• 2:25
  Speaker 1: OK, now you estimate the policy would have a net
• 2:28
  Speaker 1: fiscal cost of about $ 2. 4 billion over four years after
• 2:31
  Speaker 1: accounting for the savings from removing government contributions. Now, people
• 2:35
  Speaker 1: might then ask, how is that revenue going to be
• 2:37
  Speaker 1: replaced and will this mean bigger spending cuts?
• 2:41
  Speaker 3: Yeah, that's fair. And a lot of parties throwing a
• 2:44
  Speaker 3: lot of promises around. This coming Sunday, the ACT Party
• 2:47
  Speaker 3: will release its fully costed alternative budget. We'll show how
• 2:51
  Speaker 3: we pay for everything we talk about. And yes, it
• 2:55
  Speaker 3: will reduce the size of the bureaucracy. There will be
• 2:59
  Speaker 3: reductions in spending. I'm not going to go into every
• 3:02
  Speaker 3: one of them now. But I don't believe for a moment.
• 3:06
  Speaker 3: that we are getting all of the government that we're
• 3:09
  Speaker 3: paying for. And as a result, we're going to have
• 3:12
  Speaker 3: to have a smaller, more affordable government in order to
• 3:16
  Speaker 3: pay for just about anything in this country, including the
• 3:20
  Speaker 3: savings for the retirement that New Zealanders need.
• 3:23
  Speaker 1: David, I thank you for your time today. That's David Seymour.