Darren Snyder from the Financial Standard has written an interesting article about Financial services representative groups weighing in to a debate about the federal government’s uncertain position regarding superannuation tax reform. Here is the link, it’s worth a read: http://www.financialstandard.com.au/news/view/50563704
The Actuaries Institute believes super is far from out of bounds when considering how the Federal Government can raise additional revenue in the form of taxes. Specifically they want:
1. The introduction of a $2.5 million lifetime cap on super savings that could be transitioned into a super income stream which pays no tax on investment earnings.
2. Reduce the Div 293 cap limit from $300,000 down to $180,000.
Note that point 1 above suggests a cap on the assets in any given members pension account (across multiple super balances they hold) which is a twist to the proposal by the Labour Party to introduce a cap on tax free pension income of $75,000.
Now, some argue Australian retirees should be left alone. They’ve paid their dues during their working lives, and have bolstered super over that time with the understanding they’d have concessions necessary to enjoy a well-earned retirement.
Others on the other hand believe where members of the community are considered ‘well off’, then perhaps those to be considered so fortunate should make additional contributions to the tax system in order to support government fiscal policy! Do I hear the wealthy yelling out….”so long as the government doesn’t waste the money on over-priced school halls, bungled insulation programs and the like”….hmmm….well that’s cause for a whole new debate!!
Ok…it goes a bit beyond all that, and apologies for the simplistic outlook. But why not review the consumption tax instead of the income tax aimed at high income earners or the super balances of retirees. One thing most people agree on is “when people have more money….they spend it’. That said, why not increase the consumption tax (GST), and have everyone – Australians and Tourists – pay tax off the back of what they CONSUME. Spenders pay tax, savers don’t pay. Simple. If you’re spending, you’re mindfully contributing your share and for the most part have the disposable income to do so…….and we get some help from tourists! You throw in a low AUD, and the foot traffic to our shores is bound to increase, which adds more credence to the argument!
The reality is, the money must come from somewhere, and a combination of all these elements, super included, are worthy sources.
Food for thought!!