AUSTRALIA - The Australian Labor Party has sided with the minor parties in the Senate to block the government's Bill to abolish the superannuation surcharge.
The Superannuation Laws Amendment (Abolition of Surcharge) Bill 2005 would have given effect to Treasurer Peter Costello’s budget promise to remove the surcharge from July 1.
Announcing the Bill’s defeat, Nick Sherry, Labor party spokesperson for superannuation, described the Bill as an “exclusive tax cut” for high income earners of more than AUS$99,710 per year, with maximum benefit to those on an income of AUS$121,075 or more.
But Assistant Treasurer Mal Brough slammed Labor for blocking the Bill, accusing the Opposition party of choosing politics over “delivering real savings to Australian workers”.
“Australians and industry groups applauded the government for moving to completely abolish the surcharge,” Brough said. “They should hold the Labor party to account for voting to keep an unnecessary tax in place which discourages saving for retirement.”
The government believes removing the surcharge, introduced in 1996, would boost savings incentives for about 600,000 Australians and improve super savings by AUS$2.5bn over the next four years.
Labor argues that the AUS$2.5bn saved would provide a fairer income tax cut.
Brough insisted the surcharge would be removed despite the Bill’s defeat.
“The Labor party has simply delayed the inevitable, just as it did with the tax cuts,” he said.
The surcharge was introduced at 15% but was reduced to 12.5% and was set to fall further to 10% from July before the government moved to scrap it entirely.
Philippa Smith, CEO of the Association of Superannuation Funds Australia, previously called on all political parties to support the removal of the tax, saying it would benefit “many middle income earners” in addition to high income earners.
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