I hope Chris Bowen is Prime Minister one day. Yes big call but he is measured and thoughtful and never ever in a rush.
And he has now released a super tax policy. It is a good start…
For those who will scream “wont we have thousands of more people on the pension if we increase tax on super?” The percentage of people over retirement age receiving the pension is the same as it was in 1992 when super was introduced so end of arguement
Labor will add 15% tax on earnings from super accounts in pension phase where the earnings are above $75,000 a year. They chose this number as to get $75,000 you need to have about $1.5 million in assests in super.
Wayne Swan announced this before but, like mist of his announcements, never got any legislation ready.
There will be transistions for Capital Gains. If it is like the Swanny rules the Capital Gain in any new assets will be covered by the 15% and the tax will apply to all Capital Gains that occur after a date in ten years time.
This is still amazingly concessional, as is you have two retirees and their super fund in pension phase earns $200k a year, each retiree gets $100k each and has to pay $4,500 tax each (15% of $30,000). But it is a start… And I doubt anyone will change the tax planning advice they give to high wealth individuals.
The second change is another no brainer. The Division 293 tax is the extra 15% tax that high income earners (greater than $300,000 a year) pay on their super fund contributions. This tax means those who earn under $300,000 pay 15% on concessional contributions and those above pay 30%.
When this came in people whinged and complained and then realised that a 30% tax rate is 19% lower than a 49% tax rates. So no one changed their advice to their high wealth clients.
So what will Labor change regarding Division 293 tax? The $300,000 threshold goes to $250,000. Yawn… But a good start.
(I should mention they will also remove the 10% tax offset for defined benefit income above $75,000).
A good start. And to call it anything else is kidding yourself. We have a public finance structural deficit if $40 billion a year and this will raise $1.4 billion. But politics wins again.
And of course Mr Populist, Bill Shorten destroys the good start by ruling out any other changes to superannuation if Labor wins the next election.
This demonstrates how Labor will responsibly manage the budget and the economy without stifling economic growth or cutting billions of dollars from pensions, health and education.
I hope he knows where he is going to find the other $38 billion a year (i am kidding myself) without touching any of these.
Remember, he wont increases taxes in his first term unless he takes the tax change to next years election.
“If Tony Abbott wants to increase taxes – be it petrol, be it GST – he should take it to an election,”…
So Bill will make only minir changes to revenue and wont change any of the big expenses…
Chris Bowen for PM!!!