National Party leader Simon Bridges says the proposed capital gains tax would reduce retirement savings for an average earner's KiwiSaver by $64,000 over the course of their working life.
Photo: RNZ / Cole Eastham-Farrelly
The Tax Working Group in February recommended a broad extension of taxing capital gains, and consideration of environmental taxes, changes to personal income tax thresholds, retirement savings, and charities. A capital gains tax (CGT) is a tax on the profit from the sale of an asset.
National has stated: "The estimated $64,000 reduction in value assumes a 45-year working life and is based on 15 percent of a 'balanced' KiwiSaver fund being in Australasian shares, which would be taxed on an accrual basis on total annual gains. It also assumes the minimum employer and employee contribution rates.
"For anyone making more than the minimum contribution it would be worse. At 4 percent, the value at retirement is reduced by $74,000 and at 8 percent it widens to $113,000. The more you save, the more you pay. We haven't included the possible offsets because the government hasn't committed to them and in a whole package of changes, they may not lead to revenue neutrality.
"Most New Zealanders would be caught by the tax because almost three million of us have KiwiSaver and some will also be hit through owning a family bach or a lifestyle block."
On Morning Report today, Mr Bridges said the party's figures had been "checked out by a number of senior KiwiSaver providers".
"If anything we've been conservative on the numbers inasmuch as we have taken the minimum contribution of three percent from the employee and three percent from the employer.
"What the report and government has put forward are three options to get to something they call quote fiscally neutral, only one of them has the KiwiSaver exemptions in it ... 64 grand - the average wage in this country is $62,000, so it's a year more working for tax for Jacinda Ardern."
He didn't believe that CGT would be fiscally neutral.
National Party leader Simon Bridges. Photo: RNZ / Cole Eastham-Farrelly
Simplicity KiwiSaver fund manager Sam Stubbs disagreed and said their figures showed most people would benefit from the changes.
He said the $64,000 loss was technically true for the capital gains side of things, but realistically it would be offset by other changes proposed by the working group.
"There was the impact on the personal tax rate, employer contribution tax rate and there was the member tax credit so basically if you incorporate all of the changes that were proposed actually the majority of Kiwisaver members would be better off.
"Those earning under about $62,000 would win and indeed if you were on about $40,000 over your working life and made the normal contributions you'd actually be about $100,000 better off."
However, Mr Stubbs said some people would stand to lose under the changes.
"If you look at the other end of the spectrum where you're earning about $100,000 you'll be about $13,000 worse off.
"So it occurs to us that you have to see this not just as one tax and not just as a wealth distribution mechanism, you have to look at it in its entirety."
He said it was still very early days and it was not clear what, if any, changes might actually come to fruition.
"I think what we all need to do at the moment is take a breather, take a chill pill, wait and see what the government embraces by way of a policy here because while the Tax Working Group talk about capital gains, have given a very strong signal that they don't want the majority of people to be worse off."
"I find it very difficult to believe that any government would want to discourage from saving in Kiwisaver."
Simplicity KiwiSaver fund manager Sam Stubbs. Photo: RNZ
When Morning Report host Guyon Espiner said New Zealand was the only one of 35 OECD country without a capital gains tax, Mr Bridges responded: "My clear question to the government is this: What will it achieve? Will it solve the housing affordability issues? Not at all. It has not done that in any of those countries you've mentioned, not at all.
"Will it solve poverty and inequality in our times? It won't make the blindest bit of difference.
He said a capital gains tax had not worked in countries like the United Kingdom, Canada and Australia.
"I say it goes against the kiwi way of life because quite simply, if you're getting in the way of hard work of saving and investment, of risk, and you are going to ping people who do that - it's wrong."
Asked if the ability to have a reasonable discussion about a CGT had been lost, Mr Bridges said: "I want to be reasonable and rational … I am. But what is quite clear here is there is a deep divide between the parties.
"I don't think anyone will be surprised that we are against this tax in the form that they put forward and I see from the government a very clear agenda to pile on more taxes because they believe the Beehive knows best and will spend that money better than New Zealanders.
'It won't make the blindest bit of difference' - Simon Bridges
Mr Bridges was challenged about previous taxes introduced by the National party like the bright-line test.
The bright-line test, which requires tax be paid on any gains made by selling a residential property within two years of purchase, was introduced in 2015. The Labour-led coalition extended that to five years.
Mr Bridges said the bright-line test was a "world away" from what the current government was proposing.
"The report is a big, as I say, bold capital gains tax it will get in the way of the kiwi … way of life … I disagree on it.
Asked if National would take back the bright-line test it introduced, Mr Bridges said the party hadn't made any decisions about it yet.