Over-taxation could cost savers $100,000

Fixing the over-taxation of KiwiSaver would add more than $100,000 to the retirement savings of someone saving 6% of income for 40 years on the average wage, Financial Services Council chief executive Peter Neilsen said on Tuesday.

Launching the Fair Tax for Savers Campaign, Mr Neilsen said if only real income from interest was taxed on term deposits, a retired New Zealander with a $100,000 bank term deposit would have their retirement earnings boosted by more than $19,000 over 25 years.

There were more than 750,000 adults with term deposits - average size $132,000 - and nearly two million people in KiwiSaver.

The campaign is asking members of Parliament to cut high taxes on New Zealanders' long-term savings.

A special website was launched yesterday through which New Zealanders could email their own and other MPs and party leaders.

The campaign was backed by Age Concern, Consumer New Zealand, the Financial Services Council and the Taxpayers Union.

The campaign also involved inserting more than 120,000 FreePost cards in print media for readers to complete and send to MPs.

Mr Neilsen said the campaign aimed to highlight and change what were described as some of the highest taxes on retirement savings to be found anywhere in the world.

Long-term savers, like those in KiwiSaver, were losing about half of their KiwiSaver earnings through tax.

Claw back

What a lot of toss. So you have $130,000 that you can afford to just tuck away and you want a tax cut? Good on you. Mr Neilsen seems to have a tenuous grasp. The government is encouraging you to put your wage into what strikes me as "investing" in the share market. A dodgy practice at best. Giving you "free" money and you all line up to the trough nicely. A  Financial Services Council chief executive who doesn't see the whole picture and doesn't understand how the NZ government operates (at a loss, yours, mostly) is sure earning his money.

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