Heather du Plessis-Allan: Labour has broken its promise with KiwiSaver tax escapade

And good luck to Labour trying to shift the blame on this, says Heather du Plessis-Allan. Photo / Mark Mitchell

OPINION:

Labour's retirement tax plan might be their biggest mistake yet. It was huge.

It would've affected most of us. Three million in all. It would've left us poorer. Some would've been down $20,000 by the time they reached retirement. And it would've hit us when it hurts the most: our old age.

A tax this ruthless was always going to cause a backlash.

That's probably why Labour appeared to hide it. The plan was buried in a massive omnibus tax bill. It wasn't mentioned in the accompanying press release.

For many, the news - once it did break - was the first they'd ever heard of this tax change.

Labour will argue they didn't try to hide it. In that case, they're arrogant. How could they think they didn't need to tell us what they were planning? A change that affects so many of us at the end of our working lives should always have been flagged with us. It was going to cost $103 billion by 2070. That's a significant amount of money.

Labour's fast u-turn was the right thing to do. The alternative was to defend the indefensible and bleed out over days. Killing the idea quickly will lessen the damage. But it won't prevent it altogether.

Labour will pay for this. The biggest price is trust.

This is the party that has now twice promised no new taxes and twice broken that promise.

First, they promised it at the 2017 election. They broke it with the Auckland regional fuel tax.

Then, they promised it again at the 2020 election. After the new 39 per cent top tax rate there would be "no new taxes". Since then they've introduced the ute tax, the landlord tax and the amazon tax. And they extended the bright line test when Finance Minister Grant Robertson promised not to.

And then the brief flirtation with this retirement tax.

Labour will argue GST is not a new tax so it's not a breach of their promise. Just like they argued a levy is not a tax, and Robertson was 'too definitive'. They can try all the sophistry they like, it won't work. For the average punter, the "no new taxes" promise meant they would not pay any more in taxes after 2020 than they paid before 2020 and that is now not true.

Labour's sneakiness will also cost them. The only thing worse than someone breaking their promise, is someone breaking their promise and trying to hide it.

Good luck to Labour trying to convince the public at the next election that they won't introduce new taxes. If National plans to run a tax-and-spend scare campaign at the next election, Labour will have no defence. They can hardly ask us to trust them that there will be "no new taxes". We've been there, done that, and we're paying the taxes.

And good luck to Labour trying to shift the blame on this. It's Inland Revenue's fault for recommending it. It's the fault of small KiwiSaver providers for saying they would back it then not backing it. It's the media's fault for making it sound like a tax on the nest egg not a tax on the management fee.

Blame-shifting like a naughty preschooler in the back of the car will have limited appeal. It might convince diehard Labour voters who want to believe the story, but the already-irritated and the swing voter will see though it.

It's been a tough few weeks for Labour. The Sharma allegations made them look dysfunctional. The Auditor-General slamming them for sending cost-of-living money overseas made them look reckless with our tax dollars. And now they've been busted trying to take more without telling us.

No wonder they hit the brakes and pulled a U-turn as fast as they did. They knew how big this mistake was almost immediately.