Prime Minister Jacinda Ardern has defended the Government's attempts to introduce a tax on GST on KiwiSaver fees.
The PM was speaking to media in Marlborough to survey recent storm damage to the region.
Ardern answered questions after a dramatic 48 hours for the Government in which it introduced a tax on people's KiwiSaver fees.
The tax would have reduced KiwiSaver balances by $103 billion between when it was introduced in 2026 and 2070, when the first people who enter the workforce around the time the change comes into force will retire.
The tax lasted just 24 hours before being killed by the Government.
Ardern said KiwiSaver was incredibly important to them as a Labour government.
"It was a Labour government that brought it in," she said. "We've seen millions of New Zealanders take up that opportunity to make sure they're preparing for their retirement. We don't want to do anything to undermine that."
Ardern said it was an attempt to "even up the playing field for fund managers".
"The very strong feedback we got was that they did not believe that's what it would achieve. We heard that, we listened."
Ardern said there were mixed views, for example, larger fund managers might not have already been applying GST on their fees and services while others already were.
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The view from IRD was that there was cause and reason to even out the playing field, she said.
But there was a "very strong reaction to what was meant to be an initiative to support better competition" and the Government did not want to undermine the basic premise of KiwiSaver."
"We want people to know it's there for them to support them in their retirement ... we won't do anything to undermine that."
Ardern said it had not undermined Sir Michael Cullen's legacy.
Yesterday, Revenue Minister David Parker defended the change.
He said that after the proposal was released, smaller KiwiSaver providers had made it clear they opposed the move.
"During extensive consultation views were mixed on the merits of the technical change. The large companies profiting from the current set-up were opposed to the change, while smaller providers were more supportive of the change. This was because these providers who did charge the full GST on their service fees faced unfair competition from the bigger players.
"However, since the announcement it has become clear that smaller providers now oppose it too," Parker said.
National was fiercely critical of the tax with leader Christopher Luxon describing it as a "retirement tax".
"You cannot trust Labour on tax and this is evidence of that," Luxon said.
"It was a very quick U-turn," he said.
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