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PM John Key -
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The Prime Minister has announced a sweetener for New Zealand's 450,000 pensioners to soften the blow of a rise in GST.
John Key has told a Grey Power meeting in Auckland they will be compensated with an increase in superannuation.
Key is still popular with older voters but he knows their support cannot be taken for granted.
Heading off fears that a rise in GST from 12.5% to 15% would eat into their super, the Prime Minister has spelt out what he calls a "double whammy" increase for those pensioners.
"Superannuitants would get an income tax cut, which would apply both to superannuation payments and to any other income they receive from interest, dividends or part time work," Key said.
"In addition to their tax cut, superannuation payments would be increased up front, by just over 2%, to reflect the general rise in prices. The increase in super payments would be immediate from the day GST went up without waiting for the usual annual inflation adjustment."
He says the cost will be hundreds of millions of dollars overall.
"But that's part of the package that we are going to compensate lower income New Zealanders."
The rise in super will help hold on to the votes of some.
"If you're going to be better off, how can you moan?" says pensioner Bob Youngman.
But the tax argument is complicated and others are wary.
"I'm not happy about it at all. I didn't like what he was saying. It seems like he's definitely made his mind up," says Maurie Richards, another pensioner.
Labour is claiming credit for spooking Key into making this move. On Tuesday it said pensioners have to get a pay rise. But Labour would rather have no GST increase.
"The real impact of this tax package is a shuffling around except for those on high incomes. They will get the real gold," says Labour leader Phil Goff.
"They're giving compensation for the extra cost that GST increase will impose on people. But the only net beneficiaries of the tax changes will be those on the highest incomes 'cause he's going to bring that top tax rate down."
Key claims at least he is doing better than Goff did when Labour increased GST from 10% with no compensation for the elderly.
That was two decades ago. But some of the elderly at the Grey Power meeting have long memories.
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