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Howard Government should shelve Petroleum Repeal Bill in light of proposed oil merger



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MEDIA RELEASE

Kelvin Thomson MP

Member for Wills

Parliamentary Secretary to the Shadow Treasurer

Parliamentary Secretary to the Shadow Minister for Immigration and Population

26 August 1998

GST = REDUCED INCENTIVE TO SAVE

Figures released today by La bor spokesperson on Superannuation, Mr Kelvin Thomson, indicate that the Government’s GST Tax Package will significantly reduce the incentive to save for Australians on incomes of less than $50 000.

Mr Thomson said the figures indicated that despite maintaining the existing superannuation tax rates but cutting the marginal income tax rates, superannuation continues to be relatively attractive for individuals on the Government’s proposed 47% and 40% marginal tax rates.

“However, for those on a 30% marginal Tax Rate, ie salary less than $50 000, the relative advantage of superannuation over other savings vehicles is diminished. People with incomes in this range will receive very little additional financial return as a reward for locking their money away in superannuation products.

“A comparison of superannuation against similar investment vehicles at different marginal rates of tax reveals that at a MTR of 47%, $10,000 invested over 15 years in superannuation produces returns 38% better than a unit trust and 66% better than a bank account. The superannuation returns for someone on the 40% MTR are 36% (unit trust) and 64% (bank account).

“With an MTR of 30%, superannuation is still a slightly better long-term investment vehicle but there is little relative advantage of investing in superannuation over other private savings vehicles where the savings are not preserved. People on incomes below $50,000 will no longer have an incentive to voluntarily preserve their savings for retirement.

“This is counter to the Government’s professed objective of encouraging private savings and in particular encouraging saving for retirement.

“A combination of a 10% GST, a reduction in the marginal income tax rates, abolition of the savings rebate and the taxation of income underlying pensions and annuities will be like an El Nino effect on Australia’s national savings pool.

“This is a Government completely bereft of any retirement incomes policy”.

Further information: Kelvin Thomson 0419 594 882 or 03 9350 5777

Tim Fawcett (0 2) 6277 4242 (figures available)