Prime Minister Jacinda Ardern says last week's proposed introduction of a 15% GST charge on Kiwisaver fees was not about Government revenue, but rather intended to level the playing field for KiwiSaver providers.
The bill containing the proposal was introduced to Parliament last Tuesday, but Revenue Minister David Parker u-turned the next day following significant backlash and said the change would not be going ahead.
The bill was withdrawn from Parliament on Thursday.
Prime Minister Jacinda Ardern has rejected suggestions that the plan was a revenue gathering exercise: "It was not."
"This was a provision that has been worked on for a number of years to even up the playing field, but when you hear those who are operating in that field saying 'no actually, we don't agree with it' then look, you have to listen to that," Ardern told Breakfast on Monday.
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"At the same time, we had concerns that it could potentially undermine KiwiSaver and that would be the last thing we would want to do.
"Any revenue that may have come from GST on fees - not on contributions, on fees - would not have kicked in until 2026, that's never what it was about."
Ardern agreed the proposal should have been included in the press release for the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Bill, which contained the changes, but said there had been consultation on the idea.
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"We knew or at least had been advised that when IRD went out and did that consultation that smaller fund managers, usually those who are New Zealand based, were often already applying GST to fees. Other large fund managers and those more likely to be offshore were less supportive of the proposal.
"So we knew that there were different views, but the view was that ultimately, evening up the playing field - particularly when it was going to support a bit more competition based on performance rather than tax treatment - would ultimately end up being beneficial, particularly for those New Zealand-based ones.
"But look, when you put the proposal out and you hear very, very strong feedback, and very little support you have to hear that, and we did."
Simplicity's managing director Sam Stubbs told 1News "the change would have meant about $27,000 less for the average KiwiSaver when they've retired."
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