How’s your wallet looking this morning?
Stuffed with $20 or $50 notes hopefully. Maybe you’re preparing for slap-up feed at lunch time, or a few shandies after work tonight.
Well, make the most of it while you’ve got it.
Because the Henry Review of the Australian tax system is in full flight. It’s like feeding time at the zoo. Only the animals are fighting over the dollars in your wallet – or purse.
I’ll have more on that in a moment. We bring up the subject of taxation again in response to a couple of emails we received yesterday drawing our attention to an article in the Sydney Morning Herald.
While the article wasn’t directly about tax, it is connected.
The headline was, “Lifetime top-up proposal for those retiring on small super payouts.“
Earlier this year we predicted the government would begin an organized campaign to either ‘encourage’ you or force you to hand over your superannuation balance to them.
Not surprisingly, the mainstream press is still asleep at the wheel on this issue. But again, that’s not surprising seeing as any reporting of the Henry Tax Review will be handled by the ‘Canberra correspondents.’
The correspondents who live or die by their government contacts in Canberra. Is there really any chance they’ll point the finger and say, “Hang on, the government is stealing your money!”?
Fat chance.
The report in the SMH mirrors exactly what we said would happen. Here’s some excerpts from the article:
“Under the plan, lower-income earners retiring with fairly small super lump sums could choose to hand the money to the government in return for guaranteed income payments indexed to the age pension.”
“[H]and the money to the government…” The sad thing is, there are probably thousands, maybe even millions of people that will voluntarily hand over what possibly amounts to their life savings to the government.
Why wouldn’t you? The government is there to help you, right?
If you needed further confirmation that this plan must be avoided at all costs, you only had to read two paragraphs further down the article:
“Sources said the review panel headed by the Treasury secretary, Ken Henry, had not made any decisions but some members liked the plan, which has been backed by industry superannuation funds and the ACTU.“
Of course those vested interests like the plan. It means them getting guaranteed access to your cash.
And don’t believe the bull about this being targeted at ‘small super’ accounts. Once implemented, it will spread like a cancer. In fact the odds are the ‘voluntary’ participation in the service would soon become compulsory for everyone earning below a certain income level.
And what about this nonsensical comment from Challenger Financial Services’ executive Richard Howes:
“Our proposal is to require that 30 per cent of savings at retirement be allocated to a lifetime annuity. ‘That would assist in achieving the two objectives of superannuation policy – increasing incomes during retirement and lowering reliance on the age pension.’”
Do you like the use of the word ‘require’? Not ‘recommend’ or ‘suggest’, but ‘require.’ In other words compulsory. What if you don’t want a lifetime annuity? Tough luck, the boys at Challenger Financial Services know more about this stuff than you – obviously!
But what this all displays is a classic example of others determining how your money is spent or invested. And notice how shamelessly they do it as well.
Other aspects of the Tax Review are no different. This morning we took a brief look at the submissions sent by all and sundry to the review. Many of them appear to be personal submissions, but others include submissions from:
Association of Former Employees of the Asian Development Bank
Australian Forest Growers
Bicycle Victoria
Maitland RSL
RSPCA
Bindaree Beef Pty Ltd
Actually, take a look at the list for yourself. As you scan through it, remember that these submissions are all lobbying to decide how your income is spent.
You know how you work your 40 hour week but only receive pay for about 28 hours, because the rest goes in tax? Well, all these folks are scrounging over the money that you work an extra 12 hours a week for without pay.
Anyway, we picked one of the submissions at random. It was from Ronald P. Winthrop. As an accountant, Mr. Winthrop is naturally in a much better position to decide how your money is spent than you are.
As is usually the case with these things, the submission seems more concerned with trying to sound smart than anything else. Rather than arguing that taxation is immoral, it’s just a classic case of arguing tax should be levied in a different way.
We’re trying to recall the phrase, something about, “same something, different shovel.” We’re sure it will come to us later.
It’s clearly a case of one man who believes he knows better than you how your money should be spent.
As this entry by Mr. Winthrop on the CPA website explains:
“The government, through its review into the tax system… has asked for our help in moulding a replacement tax system for Australia’s future. This is squarely a task for the accounting profession as a whole, not lawyers and economists – measuring income is what we do.”
Funnily enough, individuals measure income as well. Their own income. And unfortunately, it’s about 30% lighter for most people thanks to the pillaging of their pay packet by bureaucrats.
Other Stuff on the Markets
The S&P/ASX200 surged 2.14% yesterday, while overnight on Wall Street the Dow Jones Industrial Average added 36 points. In Europe the FTSE100 gained 0.82% and the CAC40 added 0.49%.
The price of gold in Australian dollars is trading at $1,135.88, while in US Dollars it is trading at $955.95.
The Aussie is trading at USD$0.8423, and JPY80.47.
Crude oil closed overnight at USD$70.93.
For the biggest movers on the market yesterday click here…
{ 2 comments… read them below or add one }
“This is squarely a task for the accounting profession as a whole, not lawyers and economists – measuring income is what we do.”
No kidding eh?….Perhaps now would be a good time for accountants and bankers to admit they cocked up peoples incomes, which helped create the sub prime lending debarcle.
I’m not sure (actually I’m dead certain) I want economists telling me how to spend my money either…..Roll on the next bubble.
Lawyers? What do they know about finance? All they know about finance is 40hrs a week in an office, is actually charged out as 70 hours at $600/hr……
Can’t I look after my money? If I make a mistake, Ill learn quickly not to do that again…….
I say bring on the consumer tax, reduce business and company taxes, get rid of negative gearing on housing……
absolutely stuffed to the brim with irrelevancies and downright lies. Term of Life annuities have been around and available to superannuants for decades. There’s nothing whatever in that article which says that the state is forcing anyone to “hand over” their super and reliance on the aged pension being watered down has been happening for the past 18 years. No-one knows what the Henry Review is likely to throw up, because it’s no-where near complete yet. And the pillaging of pay packets??? It’s called taxation for which we get representation, health cover, education facilities, roads, rail and air transport infrastructure, not to mention a defence force. The above is nothing more than the usual fright tactics employed by charlatan financial advisers, of which the above author is one such.