Bill English MP
National Party Finance Spokesman

14 May 2007

Middle NZ won't benefit from Kiwisaver incentives

Middle New Zealand won't benefit from Kiwisaver incentives because they have high debt levels, face rising interest rates and can't afford to save, says National Party Finance spokesman Bill English.

He is commenting on rumours that the Budget will include significant tax incentives for Kiwisaver.

"The traditional tax incentive works for higher income people who can afford to save. They have the choice of moving their savings out of shares or savings accounts into a Kiwisaver account to take advantage of tax breaks.

"But most of these people will be in the top 10-15% of incomes, and outside this group most households can't afford to save - especially with interest rates rising significantly.

"If they have spare cash they will pay off debt so they can limit the damage rising interest rates will do to their weekly budgets.

"The only way Dr Cullen can entice large amounts of money into Kwisaver is to weight his incentive in favour of higher income earners.

"If the incentive is aimed at middle and lower incomes, it won't make much difference to Kiwisaver because middle income earners can't afford to save.

"The average wage and salary earner doesn't stand to gain from this Budget.

"The first $1 billion tax cut goes to companies, and there's no other tax relief for individuals unless they've got spare money to save."

ENDS

© Scoop Media