Superannuation a tax on families (letter)by Trevor DawesNews Weekly
, February 28, 2004
Your editorial regarding superannuation, although no doubt good for this country, ignores the Australian way of a fair go.
Families are required to pay superannuation because a significant percent of the population decides to have either no children or one child. This is below the population replacement level of 2.2 children per couple.
So families are hit by a double whammy: the very high cost of raising children and paying super which is a subsidy for those who don't have any children.
It said that the main beneficiaries of superannuation are people on high salaries who use it as a tax dodge, only paying 15% tax and with unfranked dividends, no tax at all.
It is more than likely the only people to be able to stash the cash away in super is people with no children.
The longer one contributes to super the more effective those savings will be due to compounding interest. Families have little hope of building a reasonably sized account for many years
The amount in a super fund has to be quite significant for ordinary families if they are to benefit from the low 15% tax rate, which is lower than their average tax rate.
If a central body was to act like the Singapore Provident Fund, as a repository for super funds, and then invested in Australia, the supervision of companies on the Australian Stock Exchange would need to be significantly tightened up.
Self-managed funds are growing in size at a rapid rate. This should be carried through to all people. And for good reason: they are portable and give people control over their investment (no Enrons). The disadvantage is the high regulatory costs
The current superannuation is a tax on families and needs to be addressedTrevor Dawes,
North Haven, SA