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Recommendation
ACT Caucus get off fence and start advocating a funded system.
Table 4
Budget Changes - Year 1
| Tax reductions
for superannuation contributions 2¼m New Zealanders x $4,000 |
$9,000 |
| Tax reductions
'39c - 33c' |
$600 |
| Drop in
investment income |
$700 |
| Low-income
insurance assistance |
$500 |
|
|
$10,800 |
Paid for by
| Tertiary
education - super claw back and reduction in costs |
$1,500 |
| Welfare claw back
|
$2,500 |
| Reduction in
interest costs |
$2,300 |
| Reduction in
general government expenditure (including allowance for future) |
$1,000 |
| Reduction in
budget surplus |
$3,000 |
| Additional
indirect and direct tax |
$500 |
|
|
$10,800 |
Table 5
|
Transitional Arrangements
Age at Starting date of scheme |
Benefit
Payable Government Pension + Own Savings |
| Between 64 & 65 |
100% |
| " 63 & 64 |
99.4% |
| " 62 & 63 |
98.7% |
| " 61 & 62 |
98.0% |
| " 60 & 61 |
97.2% |
| " 59 & 60 |
96.3% |
| " 58 & 59 |
95.3% |
| " 57 & 58 |
94.3% |
| " 56 & 57 |
93.2% |
| " 55 & 56 |
92.0% |
| " 54 & 55 |
90.8% |
| " 53 & 54 |
89.7% |
| " 52 & 53 |
87.9% |
| " 51 & 52 |
86.2% |
| " 50 & 51 |
84.4% |
| " 49 & 50 |
82.5% |
| " 48 & 49 |
80.8% |
| " 47 & 48 |
78.4% |
| " 46 & 47 |
76.2% |
| " 45 & 46 |
74.0% |
| " 44 & 45 |
71.2% |
| " 43 & 44 |
68.2% |
| " 42 & 43 |
65.2% |
| " 41 & 42 |
62.0% |
| " 40 & 41 |
58.5% |
| " 39 & 40 |
54.7% |
| " 38 & 39 |
50.5% |
| " 37 & 38 |
46.0% |
| " 36 & 37 |
41.5% |
| " 35 & 36 |
37.0% |
| " 34 & 35 |
31.6% |
| " 33 & 34 |
26.2% |
| " 32 & 33 |
20.0% |
| " 31 & 32 |
14.0% |
| " 30 & 31 |
7.0% |
| |
|
Table 6 Retirement Superannuation and Health Care Fund
Contributions at $4,000 a year Real and 6% Interest (Real)
| Year |
Start Year |
Contribution
$4,000 Real Each Year |
6% Interest |
Balance End
Year |
|
1 |
------ |
4,000 |
120 |
4,120 |
|
2 |
4,120 |
4,000 |
370 |
8,490 |
|
3 |
8,490 |
4,000 |
630 |
12,120 |
|
4 |
13,120 |
4,000 |
850 |
17,970 |
|
5 |
17,970 |
4,000 |
1,200 |
23,170 |
|
6 |
23,170 |
4,000 |
1,510 |
28,680 |
|
7 |
28,680 |
4,000 |
1,840 |
34,520 |
|
8 |
34,520 |
4,000 |
2,190 |
40,710 |
|
9 |
38,710 |
4,000 |
2,440 |
47,150 |
|
10 |
47,150 |
4,000 |
2,950 |
54,100 |
|
11 |
54,100 |
4,000 |
3,400 |
61,500 |
|
12 |
61,500 |
4,000 |
3,800 |
69,300 |
|
13 |
69,300 |
4,000 |
4,300 |
77,600 |
|
14 |
77,600 |
4,000 |
4,800 |
86,400 |
|
15 |
86,400 |
4,000 |
5,300 |
95,700 |
|
16 |
95,700 |
4,000 |
5,900 |
105,600 |
|
17 |
105,600 |
4,000 |
6,300 |
115,900 |
|
18 |
115,900 |
4,000 |
7,100 |
127,000 |
|
19 |
127,000 |
4,000 |
7,700 |
138,700 |
|
20 |
138,700 |
4,000 |
8,400 |
151,100 |
|
21 |
151,100 |
4,000 |
9,200 |
164,300 |
|
22 |
164,300 |
4,000 |
10,000 |
178,300 |
|
23 |
178,300 |
4,000 |
10,800 |
193,100 |
|
24 |
193,100 |
4,000 |
11,700 |
208,800 |
|
25 |
208,800 |
4,000 |
12,500 |
225,300 |
|
26 |
225,300 |
4,000 |
13,600 |
242,900 |
|
27 |
242,600 |
4,000 |
14,700 |
261,600 |
|
28 |
261,600 |
4,000 |
15,800 |
281,400 |
|
29 |
281,400 |
4,000 |
17,000 |
302,400 |
|
30 |
302,400 |
4,000 |
18,300 |
324,700 |
|
31 |
324,700 |
4,000 |
19,500 |
348,200 |
|
32 |
348,200 |
4,000 |
21,000 |
373,200 |
|
33 |
373,200 |
4,000 |
22,500 |
399,700 |
|
34 |
399,700 |
4,000 |
24,100 |
427,800 |
|
35 |
427,100 |
4,000 |
25,600 |
457,400 |
|
36 |
457,400 |
4,000 |
27,600 |
489,000 |
| 37 |
489,000 |
4,000 |
29,500 |
522,500 |
|
38 |
522,500 |
4,000 |
31,500 |
558,000 |
| 39 |
558,000 |
4,000 |
33,500 |
595,500 |
|
40 |
595,500 |
4,000 |
35,800 |
635,300 |
|
41 |
635,300 |
4,000 |
38,200 |
677,500 |
|
42 |
677,500 |
4,000 |
40,600 |
722,100 |
|
43 |
722,100 |
4,000 |
43,400 |
769,500 |
|
44 |
769,500 |
4,000 |
46,300 |
819,800 |
|
45 |
819,800 |
4,000 |
49,300 |
873,100 |
|
46 |
873,100 |
4,000 |
52,500 |
929,600 |
|
47 |
929,600 |
4,000 |
55,800 |
989,400 |
Issue
Tax Cuts vs Super Fund
Tax cuts $3B available
Advantages
- Puts the money in the hands of individuals to spend as they see fit.
Disadvantages
- Does nothing to fix other big issues - Super, Welfare, health and
education.
Other issues
How much room does $3B give you?
Not much
| |
|
|
Cost |
| Reducing top
personal rate from |
|
39c down to 33c |
= $ 600m |
| A 1c reduction in
company rate |
= $150m |
33c down to 28c
i.e. 6c |
= $ 900m |
| 1c reduction in
33c personal rate |
= $100m
|
33c down to 28c
i.e. 6c |
= $ 600m |
| 1c reduction in
21c |
= $300m |
21c down to 18c
i.e. 3 c |
= $ 900m |
| |
|
|
$3,000m |
Outcome
Virtually nothing for 77% of taxpayers.
Super Fund
Advantages
- $4,000 real a year saved for 47 years = approximately $1 m real capital
savings in retirement.
- Married couple = approximately $2 m real capital savings in retirement.
- Alters the incentives faced by those on benefits - 200,000+ back into
workforce over 3 years
- Allows you to package changes to Education and Health to reduce spending
over time to no more that the annual increase in the cost of living not the 3½
and 6½ a year real (last 10 years) increase in these respective costs.
- Enables you to get to a 15c flat company and personal tax rate within 10
years.
- Change the way people think about themselves.
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