The Government put Parliament into urgency tonight to pass a bill enacting the budget changes to KiwiSaver and Working for Families.
The changes won't come into effect until next year, because the Government wants an election mandate for them, but it says people need to know exactly what is being proposed.
Under the Taxation (Annual Rates and Budget Measures) Bill, changes to Working for Families will:
• Increase the abatement rate by 1.25 cents at every inflation adjustment round from April 1, 2012, until it reaches 25 cents in the dollar;
• lower the abatement threshold at every inflation adjustment round from April 1, 2012, until it reaches $35,000; and
• remove the inflation adjustment of Family Tax Credit amounts for children 16 and over until the amounts for younger children catch up.
"This will mean that a number of families higher up the Working for Families income scale will no longer qualify, or will receive lower amounts," Revenue Minister Peter Dunne said.
"Proposed changes to KiwiSaver are intended to ensure that the scheme continues to make it easy for people to save and so be better off in retirement, while reducing the cost to taxpayers of the subsidies to individual accounts."
The changes to KiwiSaver that are in the bill mean that:
• All employer contributions to employees' KiwiSaver accounts will be subject to Employer Superannuation Contribution Tax from April 2012; and
• the member tax credit (MTC) is to be halved from the next MTC year (year ending June 30, 2012) and the rate of payment of the credit will also be halved.
Other changes to KiwiSaver involving increases in minimum employee and employer contributions will be in another bill to be introduced later this year.
Opposition MPs were tonight using the debate on the bill to again attack the Government, accusing it of having no plan to fix basic economic problems and saying it was hitting the public service and hard-working Kiwis to claw back money to balance its books.
While it is under urgency Parliament will also pass the Taxation (Canterbury Earthquake Measures) Bill.
The previously-announced measures will make sure that contributions to people affected by the earthquake won't be taxed, and that fringe benefit tax won't apply to payments made under the Government's assistance package during the eight weeks after the earthquake.
