Comment
Don’t cut superannuation taxes and charges — COTA
COTA has called on the Federal Government to maintain public expenditure on retirement incomes and not to cut superannuation taxes. This goes against calls by others groups especially the super funds, to cut taxes, but Denys Correll, COTA’s national executive director, explains why.
COTA took this position in its appearance before the Senate Inquiry into Superannuation and Standards of Living in Retirement, which had public hearings in Melbourne in mid July.
We argue that the current taxes on superannuation, which bring in billions of dollars in government revenue, should not be removed or reduced. Pensioners and low income earners could be much worse off if other benefits like pharmaceuticals are cut to make up any revenue shortfall to government.
Although superannuation taxes might be costly and confusing, they are substantial sums. Any losses to government revenue have to be made up somewhere and often governments target important social programmes to do so.
Of course, people need incentives to save in superannuation but the evidence shows that people still benefit from the lower taxation rates for super than their marginal tax rate.
The Senate Committee’s wide terms of reference, which enable it to look into ‘Standards of living in retirement and factors contributing to it’ are welcomed. COTA has previously called for such a wide-ranging inquiry and has made a detailed submission on many policies and programmes covering security in retirement.
Superannuation is only one part of retirement income. Pensions, private savings and non-cash benefits like the Seniors Health Card and transport concessions all go towards maintaining the quality of life in retirement.
COTA does not want to see cuts to programmes that assist low income earners or to push the savings burden more onto individuals and away from government. Low income retirees are already doing it hard with their incomes failing to meet living costs. Single age pensioners with no other income are particularly vulnerable.
COTA’s submission makes a large number of recommendations aimed to improve the retirement incomes across the community.
The full submission is linked from the COTA website at What’s New: www.cota.org.au/whatsnew.
(Denys Correll has resigned from COTA to take up an international position. He presented COTA’s submission to the Senate Inquiry. )
