Jacinda Adern made a very pragmatic and sensible choice in ditching Capital Gains Tax and I am surprised at the flak she has had to take from her own people on that backdown.

What wasn't made clear in the information thus far was that Capital Gains Tax was going to apply to virtually all working New Zealanders who belonged to KiwiSaver. By way of example, research done by Canstar published that a 25 year old on $50,000 contributing 3% of their salary would have on retirement $408,000 if they were in a conservative fund and $796,000 of they were in a growth fund.

The growth fund is about Capital Gains.

Under CGT that $796,000 would have likely been reduced by 33 per cent of some $400,000 – about $130,000. The Tax Working Group were aware of this so suggested that low income earners in KiwiSaver receive additional subsidies to counter this downside. That move was simply a bribe.

It is unlikely that any such subsidy would last more than five years. Remember the Government subsidy on KiwiSaver contributions - a few years after it was introduced was reduced from $1,000 to $500. I predict that it will soon be nil.

Remember this when Capital Gains Tax pops up again in the years ahead.

Bill Capamagian, Tauranga