An overestimate of the costs of tax cuts and axing the annual $40 KiwiSaver fee subsidy is going to soften the blow for low income workers using the savings scheme, Finance Minister Bill English said today.
The Government today released its final KiwiSaver and tax packages that are to be included in the Taxation (Urgent Measures and Annual Rates) Bill to be passed in Parliament this week.
Under changes it announced before the election, contributions to KiwiSaver will be lowered to 2 percent of the weekly wage, matched by the Government.
Under Labour, savers could contribute either 4 or 8 percent with a government subsidy of up to $20 a week and compulsory employer contributions, rising to 4 percent by mid 2011.
However, the changes meant those earning under $52,000 would not get near the $1040 subsidy cap before they reached 2 percent of their income, effectively reducing the incentive for those people to save.