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Super policy needs rebuild

May 4th, 2012 No comments

Dear Sir/Madam.
The head line, “Super slug for rich in budget” AFR 28-26.April 2012 would seem too suggest how hard the high income earners will be done by this change in the contribution tax for super, whereas, it is the least the government can do to try to disguise the high tax concessions for the very high income earners.
The compulsory super was badly designed by the Keating government, and the Howard government, by introducing the tax-free super for the over sixties retirees, if the super is paid from a so-called taxed super, made the whole super even more skewed towards the high income earners.
Australia is the only country among the OECD countries which means tests the basic pension and exempts the retirees over sixty from paying tax.
The :Three pillar policy” as extolled by the government is used to keep the pensioners and part-pensioners on the poverty line, as it is stated on the OECD website, which states that the Australian retirees are the second poorest after Ireland, among the OECD countries, but the upper 30% of the retirees will probably the richest.
What is even more discriminating, is, that the self employed people are exempt from the compulsory super contribution rules.
The government should scrap the compulsory super ruling, scrap all tax concessions for super and scrap the means test for the basic pension, and anyone who wants a higher standard of living in retirement should save towards it, by saving from after tax income.
This would save the government some $20 billion and make the Australian society much more egalitarian.
Yours truly
Hawil

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