Beazley Reassures Voters On Superannuation Taxes

by Mary Swire, Tax-News.com, Hong Kong

01 November 2001

Opposition Leader Kim Beazley says that he can guarantee that the Labor Party will not raise the obligatory superannuation payment by employers if it claims victory in this months national elections.

The superannuation tax payment is set to rise to 9 per cent next year under the present ruling coalition government but during a radio interview this week, Mr Beazley said: 'I don't want to increase, and wouldn't increase the tax burden associated with superannuation. I can guarantee that.'

When asked if Labor would consider reducing the tax burden, he said: 'That would be a possible outcome according to the budgetary circumstances.'

The industry has called upon the major political parties to abolish or at least cut taxes on super contributions and earnings because it diminishes the money earned for pensioners; it wants the final payout taxed instead.

But last week Treasurer Peter Costello confirmed that the 15 per cent tax on superannunation contributions will remain in place if the current ruling coalition government is re-elected. 'It's pretty complicated,' Mr Costello told Adelaide radio 5DN. 'The fact of the matter is that the tax on the way in is less than your marginal income tax rates, so it's still better to put money into superannuation than to take it as income. But that system, having commenced 15 years ago, would be incredibly complicated to unravel now.'

The Association of Superannuation Funds of Australia (ASFA) argues that superannuation and retirement incomes have become key election issues as new polling finds more than 7 out of 10 voters in two marginal electorates would prefer the removal of taxes on super contributions to an income tax cut of $6-$7 per week.

Both Mr Costello and Mr Beazley have said that they will hold an inquiry into super funds supervision if they are voted into office and Mr Beazley claims that he will ensure the inquiry is conducted in his first 100 days as PM.

The Australian media is reporting that the triple taxation of superannuations contributions and investment profits earned the government around A$5 billion last year alone, which, if left alone in taxpayers' accounts would have grown to $545 billion - 10 per cent more than those recorded in December 2001.

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