NZ Superannuation Payments To Rise Under Proposed Tax Changes
Monday, March 1, 2010
New Zealand’s Prime Minister, John Key, has said that superannuation
payments will immediately rise in two separate ways if the government decides
to increase goods and services tax (GST).
The government is said to be considering a tax reform package switching from
direct to indirect taxation with across the board tax cuts and changes to property
taxation, that might include a rise in GST from 12.5% to 15%.
In a speech, Key outlined how the package’s changes would increase
pensioners’ income. "Superannuitants would get an income tax cut,
which would apply both to superannuation payments and to any other income they
receive; for example from interest, dividends or part time work," he said.
"Second, and in addition to their tax cut, superannuation payments would
be increased up front, by just over 2%, to reflect the general rise in prices,”
he continued. "The increase in super payments would be immediate from the
day GST went up, without waiting for the usual annual inflation adjustment.”
"This double-whammy increase means that under an income tax/GST switch,
superannuitants would have their incomes lifted quite significantly, and by
an amount that exceeds the increase in prices."
In addition, he added that across-the-board tax cuts would lift the after-tax
average wage - raising the floor for superannuation payments, which are linked
to the average wage.
"Super payments for a married couple cannot drop below 66% of the after-tax
average wage, so any tax cut that affects the average wage will also affect
this floor for super,” he said. "So when people talk about GST they
should bear in mind these different means of compensation, which together are