National Party leader Christopher Luxon is lashing out at the Government's plan to charge GST on KiwiSaver accounts, which would give it an extra $225 million a year in tax from 2026.
The planned Tax Bill was introduced to the House on Tuesday, with GST experts warning KiwiSaver balances would be hit hard by the changes.
Luxon said everyday Kiwis were set to be punished and would miss out on thousands of dollars by the time they reached retirement.
"The big takeaway here is you've got a Government that's utterly, totally addicted to spending and so, as a result, they've got to be obsessed with dreaming up new ideas to get more and more tax in the door," he told AM on Wednesday.
"This is now a retirement tax on top of all the other taxes that we've had."
According to modelling by the Financial Markets Authority, the tax could slash about $103 billion from KiwiSaver funds within 50 years.
Luxon went on to accuse the Government of being "bad with money".
"We're going to stop it," he said. "I actually think the team of 5 million people needs to stand up this week and actually say to the Government, 'Enough, stop' and actually get the Government to withdraw it.
"This is such a bad idea - a retirement tax when we're trying to encourage people into KiwiSaver, it makes no sense."
Luxon said he received multiple text messages from people lambasting the plans.
"People are just so angry about it - how can the Government pile another tax in the middle of a cost of living crisis where everyone's doing it tough, just trying to get through it?
"It's the cumulative effect of just all those costs adding up and it takes value off your KiwiSaver."
While the changes wouldn't come into effect until 2026, Luxon reiterated the National Party's belief the Government was "spending money, wasting money and not getting outcomes".
"[Revenue Minister] David Parker can dress it up any way he wants, this is the same man that brought us the cost of living payment that is spraying cash to investment bankers and French backpackers and dead people," Luxon said. "He can say whatever he likes but, the bottom line is, it's a big tax and spend Government."
Parker declined to appear for an interview with AM on Wednesday.
He defended the Bill on Tuesday, saying an imbalance would be corrected by the change.
"We're not making any change to principle," Parker told RNZ. "Inland Revenue believes that these changes are necessary to align current practice with the underlying principles in the law.
"There is inconsistent treatment of GST of all services, depending on the way in which people currently invest... I think that it's important that the tax system reflects the underlying principles that financial services are meant to be exempt from GST, but services that are not a financial service are meant to be GST-able."
