Tony Abbott performed another politically expedient backflip yesterday when he said: “We have made a very clear decision that we aren’t ever going to increase the taxes on super, we aren’t ever going to increase the restrictions on super because super belongs to the people. It’s your money. It’s not a piggy bank to be raided by government whenever it’s short … ”
The comment came after it was discovered the government had actually considered winding back superannuation concessions in April.
Abbott appears a little confused, though. No one is suggesting the federal government confiscate superannuation, but rather, remove tax exemptions on earnings made within super accounts. If you have a million dollars in a term deposit, the interest earned is taxed. If that term deposit is held in super, there’s no tax on the interest. As such, when the Howard government exempted a higher level of super contributions from tax, it was essentially transferring wealth from young to old and, more specifically, from poor to rich.
No one is suggesting that the government confiscate superannuation, but taxing the wealthy at at least the same rate as the middle class isn’t really that bad an idea. But then again, no one would ever accuse the Abbott government of being economically responsible.
It is actually even worse than thought. My parents-in-law are quite wealthy. They are way to old to benefit from super and SMSF’s were largely unknown when they were of working age. They are entirely funded from personal investments. Consequently, they pay a very substantial amount of tax – which they are not overly fussed about as they know their wealth and their personal incomes are high.
Now consider a similar couple (who would be a fair bit younger admittedly) with similar wealth, much of which is in super. Their fund is in pension phase, so the fund pays no tax and they pay no tax on the super fund sourced pension. Same level of wealth and income, but massively different tax outcomes.
Neither couple is a drain on the pension system, but the tax system treats them very, very differently.
Change is desperately needed, but I suspect Abbott’s strategy is solely directed at challenging Labor to raise this as an election issue. Abbott knows that he has a range of his pathetic 3-word slogans at the ready to attack Labor.
Cap’n Abbott gets away with his asinine comments and backflips because the Labour party is giving him a free run in case they are wedged by another LNP mis-information campaign such as that against the MRRB and Carbon tax.
Labour needs to get out there and stand for something, rather than falling for everything.
If Labour said; in simple terms for the dummies; what has been said here they would have one policy that most voters would see of benefit to all Australians, but…..
Where’s Norman to let us know that it’s all a bit complex?
That’s our Toady.
This has nothing to do with effective policy … and everything to do with trying to eke a political advantage out of superannuation policy … vintage Abbott … seems that the (confected) debt and deficit crisis has entirely disappeared …