Industry unites to cut super taxes
Two of the financial services industry’s most influential lobby groups have joined forces to call on the Government to cut taxes on superannuation contributions in order to fund a shortfall in the retirement savings of the country’s baby boomers.
In a joint statement yesterday, theInvestment and Financial Services Association (IFSA)and theAssociation of Superannuation Funds of Australia (ASFA)called on the Government to use its budget surplus to fund cuts to upfront taxes on superannuation contributions.
The two bodies were responding to comments made at the weekend by the Prime Minister, John Howard, who said the Government may consider returning part of any Government surplus back to individuals as tax cuts.
The chief executive of IFSA, Richard Gilbert, says the surplus would be better directed towards boosting retirement savings by cutting taxes on superannuation contributions.
"The surplus could be used to create a winning dividend for retirement savings, by reducing upfront contribution taxes on super. This would not only benefit the national economy, it would also boost the retirement savings of every Australian," Gilbert says.
The director of policy and research at ASFA, Michaela Anderson, says the Government could use a budget surplus to fund future retirement savings rather than spend it on a short-term tax cuts.
“It is encouraging to hear that the Prime Minister is considering tax relief for ordinary workers and their families as the first option. The Government has a great opportunity to build savings for the future, rather than using the surplus to deliver a short-term boost to consumption,” she says.
Anderson says the majority of soon to be retired baby boomers will not meet their own expectations for an adequate retirement income, creating serious issues for future Govenernments unless measures are taken now to boost retirement savings.
"The ageing of the baby boomers, in particular, presents a serious problem for future Governments. They will begin retiring over the next decade and, for the majority, their retirement income will fall well short of their expectations," Anderson says.
According to figured supplied by ASFA, the Government’s tax take from superannuation savings currently stands at $5.6 billion per year, almost double what it was five years ago.
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