The Coalition has today confirmed that they would re-impose a 15 per cent tax on Australia's lowest paid workers (earning below $37,000) including 2.1 million women.
When asked today during his appearance at the National Press Club whether he would maintain the Low Income Superannuation Contribution (LISC) Tony Abbott confirmed the Coalition would not keep this important Labor tax cut.
JOURNALIST: The Coalition's promised to scrap all expenditures relating to the mining tax, I believe. And also in your document at the weekend you said there wouldn't be substantial changes to superannuation. But there's something called the low income super contribution, which I think is funded from mining tax?
ABBOTT: Yes.
JOURNALIST: And scrapping it I think would make superannuation more expensive for people earning under $37,000 a year. So I'm just wondering if you can – does it stay or does it go? Can you just reconcile that?
ABBOTT: Well I said there'd be no unexpected detrimental changes and the change you allude to is one we've put on the record many months ago and yes, that stands.
This development constitutes a superannuation tax increase of up to $500 on every Australian worker earning below $37,000.
The Low Income Superannuation Contribution has been in place since 1 July 2012 at a cost of approximately $1 billion per annum.
The purpose of the Low Income Superannuation Contribution is to effectively refund the tax paid by low income earners on their concessional superannuation contributions, including the superannuation guarantee, up to $500 per annum. Because of their lower income tax rate, lower income earners otherwise don't get the same concessional benefit as workers on higher incomes.
Treasury analysis says the 3.6 million workers earning under $37,000 includes:
Around 1.1 million workers in NSW
Around 910,000 workers in Victoria
Around 800,000 workers in Queensland
Around 260,000 workers in South Australia
Around 360,000 workers in WA
Around 90,000 workers in Tasmania
Around 30,000 workers in the NT
Around 50,000 workers in the ACT
3.6 million people equates to 3 in every 10 workers.
Far from decreasing taxes and increasing retirement savings of Australians, the Abbott Coalition will go into the election opposing the Low Income Superannuation Contribution while also opposing Labor's policy to raise the Superannuation Guarantee from 9 to 12 per cent.
It also immediately destroys Mr Abbott's so called commitment earlier in the week to make no changes to the superannuation system. The re-imposition of a $1 billion per year tax on 3.6 million Australians is an unexpected and dramatic change by any assessment
