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Latham understates tax impact on low income savers.



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DEMOCRATS

MEDIA 04/874

WEDNESDAY 8 SEPTEMBER 2004

SENATOR JOHN CHERRY AUSTRALIAN DEMOCRATS SUPERANNUATION SPOKESPERSON

Latham understates tax impact on Low Income savers Labor Leader Mark Latham will find it hard to justify abolishing the Low Income Earners Superannuation Co-contribution to pay for tax cuts for middle and upper income earners, according to the Australian Democrats.

Democrats Superannuation spokesperson Senator John Cherry said Australian Bureau of Statistics data shows that 18% of people earning less than $40,000 are making personal contributions to superannuation and would be substantially worse off under Labor's tax plan.

"Mark Latham looks more the Sheriff of Nottingham rather than Robin Hood when it comes to superannuation - robbing the poor to give to the rich. Low income savers are the big losers from Labor's Tax Plan," he said.

"In 2000, the ABS estimated that 175,000 Australians earning less than $20,000 a year were making personal contributions to superannuation, with 64% contributing more than $20 a week.

"A person earning $450 a week and making a personal contribution of $10 a week to their superannuation will lose $783 a year in Government super contributions and gain just $42 a year in Superannuation Tax relief, and $256 in income tax relief, leaving them $9.25 a week, worse off.

"Labor needs to independently model the impact of its superannuation changes on national savings. With Australian households spending $104 for every $100 they earn, Labor's policy will reduce household savings further and put more pressure on interest rates.

"The Democrats supported the introduction of the Low Income Earners Co-contribution and cannot guarantee Senate support for Labor's tax plan. We will be releasing a full policy response to Labor later in the campaign," Senator Cherry said.

IMPACT OF LABOR TAX PLAN ON LOW INCOME SAVERS ($ for savings per week) Income p.w. $5 a week $10 a week $20 a week 400 -3.28 -10.78 -24.53

450 -1.75 -9.25 -23.00

500 0.34 -7.16 -20.91

550 1.49 -6.01 -19.09

600 1.58 -5.92 -16.50

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