News 
 National News 
 National 
 General 
 Super tax under spotlight 

Super tax under spotlight

06 Nov, 2009 08:10 AM
Treasurer Wayne Swan has hinted that the Henry Tax Review may include recommendations targeting superannuation.

The review will provide a 10-year plan for tax reform but Mr Swan said yesterday there may be some issues the Government could deal with immediately.

The review panel, chaired by Treasury Secretary Ken Henry, is due to deliver its report to the Government next month. The aim of the review was to create a fairer, simpler and more competitive system, and tax on super was one part of the current system that might not ''live up to ideal of fairness''.

''Less than 2 per cent of taxpayers earn more than $180,000 each year, but they receive a concession worth 31.5per cent of their contributions,'' Mr Swan said.

''Compare this to an average family with kids and total income of $115,000. The primary earner on $80,000 or $90,000 would receive a concession worth 24.5 per cent of his or her contributions, and the secondary earner would receive a concession as little as 1.5 per cent if he or she earned under $35,000.''

With the Henry Tax Review set to form a cornerstone of the Rudd Government's economic legacy, its performance through the global economic crisis was praised by the chief of the Reserve Bank of Australia yesterday.

Central bank governor Glenn Stevens gave his backing to the stimulus enacted by the Federal Government, a slap in the face for the Coalition that opposes them.

Mr Stevens lauded the actions of the Government in steering the economy through the downturn.

''Public finances remain in good shape, with a medium-term path for the budget back towards balance, and without the debt burdens that will inevitably narrow the options available to governments in other countries,'' he said last night.

But Mr Stevens questioned whether enough was being done to ease the housing shortage, suggesting land supply, zoning and approval processes would pose ''persistent difficulties''.

Australia's population was growing at the fastest rate since the 1960s, he told the Economic and Social Outlook conference during a speech about the ''road to prosperity''.

''It follows that the demand for additional dwellings, among other things, is likely to remain strong,'' he said.

''Corresponding effects will flow on to urban infrastructure requirements and so on. So the question of whether enough is being done to make the supply side of the housing sector more responsive to these demands will remain on the agenda.''

He warned ''adequate financial resources'' would be required.

''In that regard the current issue is not the cost of borrowing for end buyers, which remains low, but the availability and terms of credit for developers,'' he said.

Mr Stevens concluded that Australia's financial sector and public finances were in good shape and the country remained open for trade and investment, with exposure to Asia that still had the most ''dynamic growth potential''.

''The emergence of China and India is a benefit to Australia, but we stand to have a heightened exposure to anything going seriously wrong in those countries,'' he said.

Australia recorded its largest monthly international trade deficit in 18months in September, at more than $1.8billion, as net exports continued to detract from economic growth, Australian Bureau of Statistics data issued yesterday showed.

with AAP

Print
Increase Text Size
Decrease Text Size
Page:
1

comments


Date: Newest first | Oldest first
The government should remove the 15% tax on super contributions for low income earners rather than focusing on "the rich". Help the low income earners help themselves
Posted by Average Joe, 6/11/2009 12:32:54 PM
I wonder if Mr Henry's advisers and consultants have considered the long term downstream effects of this superannuation tax. Similar to disincentive effect of the progressive tax rates on work and subsequently on earnings, that is the more you earn the higher marginal tax you pay with a number of "traps" along the tax payable vs earnings curve where the effective tax rate has been proved to be very high, the proposed progressive superannuation tax rates will have a disincentive effect on people's effort to contribute to their superannuation funds. When their contribution declines, fund managers will have less money to invest and this would lead to declining returns and eventually to retirees' income in future and more pension payments from government coffer. Maybe some other better measures are needed. Average Joe's proposal is on? Also, to boost the incentive to contribute without substantial sudden reduction in superannuation tax revenue, gradual reduction of the tax rate for low income contributors is another option. Income threshold for superannuation co-contribution can also be adjusted in favour of low income contributors.
Posted by Dao Nguyen, 6/11/2009 9:58:29 PM
More tax => less contribution => less fund for investment => less returns => less distribution to members => more government pension spending. Am I right?
Posted by Dao Nguyen, 7/11/2009 6:38:14 PM

post a comment


Screen name  *
Email address  *
Remember me?
Comment  *
 
We invite and encourage our readers to post comments. Comments are moderated and will appear as soon as our editor has approved them. When posting comments you agree to be bound by our Terms and Conditions.

MOST POPULAR

Yourguide to Your Toyota
University of Canberra - click here
 
Red Hot Deals at Eurobodalla! click now
 
 
Click here to read See Canberra online!
 
James Bond Happy Hour at Flint - click now
 
Ready, Set. Drive!
 
Classifieds
 SEND...
 SAVE...
 SHARE...