The Federal government led by Prime Minister Malcolm Turnbull may scrap the expensive rise in compulsory superannuation. Faced with tough choices in slashing expenditure, hiking revenues and creating surplus, the government is eyeing a permanent halt to superannuation increases as the nice way out.
This follows the resistance to its earlier plan of hiking the Goods and Service Tax (GST). The plan is facing heavy opposition within. Many coalition MPs are of the view that GST hike will be a blunder in an election year.
The time-bound superannuation increments had been a legacy of the previous Labor governments. That is being opposed by many employers who are facing the burden of adding an average AU$20 billion annually to their wage bills.
The government is seriously thinking on a permanent halt to the super increments. That cap will halt the imminent rise in compulsory super from 9.5 to 12 percent. It can also help in recouping billions of dollars to the federal budget, reports The Australian.
Differences over hike in GST have the ruling front simmering. So, some reforms in superannuation can be Turnbull’s surprise plan for the election. According to the government’s assessment, the workers on low salaries are not gaining much from the forced contributions to superannuation. So, the projected backlash from its suspension may not be high. The Australian Chamber of Commerce and Industry also warned against forcing employers to pay the full 12 percent into superannuation.
Meanwhile, the Federal Government indicated that it is ready to put on hold the proposed GST reform. Pointing to the continued instability in economic markets. the government has back tracked on GST hike, reports The Australian Financial Review.
It quoted Turnbull as saying that no white paper will be issued to outline the government’s tax reform plans. The PM said tax changes would be reflected in the budget. The government is also cagey on the revenue apportioning part for welfare payments as a compensation to any changes made in GST.
Turnbull also denied the speculation that the government may scrap the increase in compulsory superannuation. However, the PM underscored the responsibility of states in raising taxes such as land tax and payroll tax to meet their budget requirements.