In the Loop podcast: Do you want tax with that? The Government's KiwiSaver U-turn

Prime Minister Jacinda Ardern and Deputy Prime Minister Grant Robertson. Photo / Mark Mitchell

While the Government made a swift U-turn on a proposal to tax fees on KiwiSaver funds, questions remain over what impact the plan, and the snap backdown, could have politically.

The proposal would have forced managed funds and KiwiSaver providers to pay a flat 15 per cent GST on fees.

The Government's backdown came after a chorus of opposition to the move, including National Party leader Christopher Luxon saying his party would push to stop the "retirement tax".

Today on the Herald's youth podcast, In the Loop, journalists Cheree Kinnear and Katie Harris discuss how the proposal was revealed and just how quickly it fell.

The hosts speak about what the reaction was like with the public, on social media and with politicians.

Luxon told the AM show Kiwis would be angered by the plans to charge GST on fees paid on KiwiSaver accounts from April 2026, which could net the Government millions of dollars a year in additional revenue.

"This is such a bad idea; a retirement tax when we're trying to encourage people into KiwiSaver doesn't make any sense," Luxon said.

"This can't stand, this is a really bad idea."

Prime Minister Jacinda Ardern said the U-turn was as a result of feedback from fund managers.

"It was clear to us that we had an uneven playing field in the way GST was being applied to fees and services. Ultimately, though, we thought we were fixing the system for those fund providers. We've heard very clearly from them, they don't believe that's what it would achieve," Ardern said.

Revenue Minister David Parker continued to defend the change.

He said that after the proposal was released, smaller KiwiSaver providers had made it clear they opposed the move.

Later in the show Kinnear and Harris discuss the verdict of the Lynette Dawson murder trial and Marama Davidson getting into hot water over a social media post.