Showing posts with label pension. Show all posts
Showing posts with label pension. Show all posts

Wednesday, May 06, 2009

Rich to pay more

Rich to pay for pension rises in federal Budget | Federal Budget 2009 |
PENSIONERS will receive up to $30 a week extra in a Federal Budget that will target Australia's biggest earners.

The rich will have their superannuation tax breaks slashed in half to fund the pension increase, with next Tuesday's Budget expected to boast the largest deficit in Australian history.

The deficit could be as high as $70 billion - a $90 billion turnaround over last year's projected $22.4 billion surplus, the Herald Sun reports.

The Budget will not return to surplus until 2015.

To claw the Budget back into the black, the government is expected to announce a raft of painful spending cuts.

One such measure - that will save $2.7 billion over four years - is understood to be a plan to cut in half the amount wealthy people can salary sacrifice into superannuation.
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The maximum that high-income earners can salary sacrifice will be halved from $100,000 to $50,000 for people aged over 50, and from $50,000 to $25,000 for those under 50.

The change means wealthy people will have more of their income taxed at 46.5 per cent rather than the concessional rate of 15 per cent when they make super contributions.

Under current arrangements someone salary sacrificing on an annual income of $57,000 receives reduction in tax of $880, compared with someone on $295,000 who gets a $24,000 reduction.

According to government sources the measure will hit those on average annual incomes of about $220,000, but not affect 98 per cent of people who sacrifice pay into super.

It will be sold as a way of funding the government's promise to increase the single rate of the age pension. It is under pressure to raise it from $284.90 to almost $314 a week.

Those in line for a pay rise include 2.1 million age pensioners, 740,000 disability pensioners, 140,000 carers and 300,000 veterans.

Treasurer Wayne Swan refused to comment on the Budget super hit yesterday, but conceded there would be unpopular decisions.

"These are needed to make room to deliver our commitment to pensioners and to continue supporting jobs and investing in our recovery," Mr Swan said.

Opposition Leader Malcolm Turnbull said deficits until 2015-16 underlined the recklessness of recent stimulus spending by the government.

"What were they thinking? Piling billion upon billion of new debt, regardless of the consequences," Mr Turnbull's spokesman said.