Just a minute, the Henry review recommended AGAINST increasing the compulsory super contribution?

Oh Jesus. Just how bad is this government? Before you all go thinking that you're going to get another free hand out, you might want to read this article from the ABC's The Drum site. (The Government will) go to the election trumpeting an increase in the compulsory super contribution to 12 per cent for all. Never mind that the review panel specifically rejected this, for sound policy reasons. The current taxation regime for superannuation is massively distorted in favour of the rich. (And no credit to the previous government for this!) It's taxed at a flat rate of 15 per cent. So it favours high income earners over low and middle income earners. The well-off can put money into super and avoid paying high marginal tax rates while people on low incomes can end up paying as much or more in tax on their retirement savings than they pay on their wages. The review's answer: Treat superannuation payments as income and tax them at the employee's marginal tax rate, minus a flat rate offset. It's a solution that would make the tax system fairer and increase the pool of retirement savings but the Government's rejected it. Instead, it has opted for a modern Labor solution: All about bringing everybody along, and not offending the powerful. Give people on lower incomes a handout to offset their tax, but don't close down the tax haven for the well-off, and go to the election trumpeting an increase in the compulsory super contribution to 12 per cent for all. You see, the sting in the tail for the eventual increase to 12% compulsory employer contributions, (eventual because it wont reach that level until 2020), is that "...for lower income workers, with less bargaining power, the increase in retirement savings paid by the employer will likely be offset by lower wages during their working lives." So the rich will keep their perk whereby they can reduce the amount of tax they pay by putting more of their income into superannuation schemes, while the poor will receive a token payment from the government at the price of lower wages. But how many people will vote in the next election thinking that this "brave" and "reforming" government has taken on the "evil" mining companies and their so-called super profits, (and just what actually constitutes "super profits" by the way, and who decides what level of profit a business makes is or isn't reasonable?), to give them pots of free money? My brain hurts.

Posted via email from Garth's posterous