"Cheap scare tactics based on a deliberate lie," said Labour finance spokesperson Michael Cullen today in response to
Bill Birch's attack on Labour's superannuation policy.
"Mr Birch's error is too obvious to be accidental. His figures significantly understate the revenue the dedicated tax
would yield because they are based on an incorrect interpretation of how the system would work.
"The New Zealand Superannuation Fund will be funded from existing taxation. It will not require a tax increase.
"The eight cents dedicated tax will be levied on every dollar of income tax. This is not the same as 8 percent of the
income tax take, as Mr Birch pretends. And the gap between the two calculations in terms of revenue raised is
substantial.
"In the present financial year, it takes the number from the "about $1.3 billion" Mr Birch quotes to around $5.6
billion. In the year Labour would put the scheme in place - 2001-2002 - the difference in yield would be even higher;
from $1.4 billion to a little over $6 billion.
"Mr Birch's second mistake is that his calculations are based on gross superannuation payments not net. Clearly it makes
better sense to use net payments as it is these which determine the fiscal impact to the Crown, and to the fund given
that it is funded from tax revenues.
"Mr Birch is also being dishonest by glossing over the National Party alternative - a meaner pension now and higher
taxes in the future as both the old and the young are sacrificed to National's forlorn attempt to bribe its way back
into office with tax cuts.
"The evidence is in Treasury tables at the back of Mr Birch's last budget. These show that unless some attempt is made
to pre-fund the costs of supporting the baby boomers in their retirement, the taxpayers of the future will face
significantly higher taxes than we pay today.
"Labour's New Zealand Superannuation Fund will include a pre-funding component. Surpluses will be built up by setting
the dedicated super' tax at a level higher than is needed to cover immediate outgoings," Dr Cullen said.
"National is chasing narrow and short-term political advantage. Labour is putting the priority on providing stability
and security of income to today's elderly and to the elderly of the future while at the same time maintaining fairness
between the generations."
Revenue from Super Fund Tax set at 8 percent vs. 8 percent of the Total Individuals tax take
$ Million
Fiscal Year Personal Tax Base Rev. from Super Fund tax @8% 8% of total Ind. tax take
1999/00 70,326 5,626 1,250
2000/01 73,229 5,858 1,307
2001/02 76,214 6,097 1,387