The Turnbull Government may be shifting its approach to tax reform, offering new rules for a single super tax rate which will apply to all Australians regardless of their income.
In its bid to create a fairer way to encourage retirement savings, the Government is now targeting superannuation tax breaks amidst concerns that its proposal to increase the GST will no longer pass the Senate.
The Australian Council of Social Service (ACOSS) and others had previously warned the Government that an increase to the GST may be unfair because it would cost low-income households a larger proportion of their incomes.
A five per cent increase to the GST would raise around $27 billion each year, however, about one third of that would be spent on compensation for low-income earners.
Mr Turnbull, whilst claiming he did not necessarily subscribe to a rise in the GST, instead insisted it was only one option for a tax reform that should focus on economic growth and job creation. In seeking a ‘fairer’ tax system for all Australians, according to The Australian, he is now turning his attention towards super tax reform.
It is believed the proposed new rules, now a favoured option within the Government, will create a more level playing field for low-income earners saving for retirement, for whom there is currently little or no incentive. The proposal will also raise $6 billion in new revenue to help support wider tax reform and assist in the funding of income tax cuts.
In what should be seen as good news for many older Australians, the Government’s proposal would not involve any retrospective change to money already saved in existing retirement accounts.
Treasurer Scott Morrison welcomes the proposal of a single tax rate on superannuation.
“What we are seeking to do with superannuation is ensure that people are independent in their retirement and that the tax incentives that are applied to superannuation are the ones that best put Australians who are at risk of not being independent in retirement in a strong position,” said the Treasurer.
What do you think of this proposal? Would you prefer to have fairer taxes on superannuation rather than an increase in the GST? Or would you rather the Government leave super alone?
Read more at The Australian