Peak bodies call for cuts to savings tax
Richard Gilbert
Two key industry bodies have joined forces to congratulate the Rudd Government on its five-point plan to reduce inflation by encouraging both national and private savings, saying that cuts to superannuation ‘savings tax’ are the perfect place to start.
The Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos and the Investment and Financial Services Association (IFSA) chief executive Richard Gilbert pointed to recent IFSA research that established a link between government, business and household savings. According to the research, when government savings are low, so generally are household savings.
Gilbert said it is imperative measures are introduced to reduce household debt, which has increased exponentially in the past 15 years.
“In the 1980s, the average household owed less than $50 in debt for every $100 in income. In just 15 years, the ratio has tripled to almost $160 of debt for every $100 of income.”
Vamos and Gilbert said they believed that reducing the contributions tax of 15 per cent of superannuation guarantee payments and expanding the Government’s co-contribution policy would go a long way to boosting household savings.
“Employees most likely to have a savings shortfall include women and lower income earners who, as history has shown, are encouraged to save more for their retirement when sufficient inducements and incentives are offered,” Gilbert said.
“Reducing the ‘savings tax’ on super … would be the logical place to start.”
Vamos added that increased contributions to superannuation would significantly improve the nation’s financial wellbeing as super funds would have more money to invest in productive enterprises, including infrastructure.
She said ASFA research has found high levels of community support for measures that would lead to a $30 a week increase in retirement income, as opposed to a $6 tax cut now.
Gilbert said that both ASFA and IFSA believe it is important that taxation policy does not fuel inflation and that more needs to be done to encourage people to save more for their retirement.
AUTHOR
Justin Knight
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
