After causing the superannuation industry two weeks of panic with a government leak about a possible new tax on superannuation withdrawals, it appears the Prime Minister has recently backed off – to an extent.
Clearly this cash strapped government views the billions of dollars in superannuation funds as an irresistible temptation. The challenge is how to get at it without causing a backlash from all those voters who are behaving responsibly and saving for their own retirement.
Financial journalists are tipping a smaller tax increase than originally leaked – they’re just not sure how the government plans to extract it. It’s a fair bet that the tax will be sold as a tax on the rich – which is all about fairness. It remains to be seen as to whether only the very rich are effected, or when the dust settle, a lot more people find themselves paying more tax.
This government has regularly moved the superannuation goal posts and in the process caused a lot of uncertainty amongst people who are trying to save for their future.
In a country that is going to have great difficulty funding the services that retiring baby boomers will be seeking, it’s unbelievably short sighted to introduce changes and uncertainty that will make superannuation a less appealing investment to those people saving for their retirement.