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Super tax cut affordable and responsible.

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Senator the Hon Nick Minchin

Minister for Finance and Administration Deputy Leader of the Government in the Senate

Media Release

05/2006 22 January 2006

Super tax cut affordable and responsible

Removing the tax on Australians' superannuation contributions would deliver real benefits to workers without the risk of overheating the economy, the Minister for Finance and Administration, Senator Nick Minchin, said today.

In a speech to the Young Liberal Movement Federal Convention in Sydney, Senator Minchin said there was a strong case for abolishing the current 15% tax on superannuation contributions, which raises around $3.3 billion in Budget revenue.

"This is a Labor Tax, brought in by Paul Keating in 1988 in a typically desperate bid to raise revenue, which made Australia one of the very few countries that taxes peoples’ contributions to their superannuation," Senator Minchin said.

"The super industry estimates that the abolition of this very odd tax could mean the average worker would be up to $30 a week better off in retirement."

Senator Minchin said that further income tax cuts which boosted consumer spending might force the Reserve Bank to raise interest rates to keep inflation in check.

"There is however a very obvious way to reduce taxation without unduly stimulating the economy and putting upward pressure on interest rates, and that is to look at how we tax savings as opposed to spending or income," Senator Minchin said.

"Abolishing Labor’s tax on super contributions would deliver a very real benefit to Australian workers without overheating the economy."

"If there is any capacity to reduce Government revenue in this year’s Budget within the

context of good economic management, I think we should look first at the possible removal of Paul Keating’s tax on savings before we consider further changes to income tax arrangements."

Media Contact: Matthew Doman 08 8362 8600 or 0439 467 806


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This page was last updated 23 January, 2006