Comment on proposed Commonwealth superannuation surcharge

COMMENT FOR ALAN THORNHILL ON THE SUPERANNUATION SURCHARGE FROM FINANCE MINISTER MAX EVANS

12/3/97

Western Australia has a number of serious concerns about the proposed superannuation surcharge which is an example of revenue policy at it worst.

It is inequitable in its application, expensive to administer and not without serious questions about its constitutional validity.

At this stage we believe that the main superannuation schemes administered by the State are constitutionally exempt from the surcharge.

Under the current tax system these schemes are treated as constitutionally protected, so unless the Commonwealth can show us how the constitutional problems can be overcome, the surcharge will not apply to these State schemes.

However, this would create a situation where State employees were being taxed differently from other employees and that is not equitable.

From an administrative viewpoint, the scheme is cumbersome, costly, unfair in how the burden of cost falls, and for some people easy to avoid.

For example, the surcharge would probably apply to about 1000 people in State schemes, but it would have to be administered for about 200,000 employees.

The Commonwealth has failed to justify its preference for this proposal over alternative revenue measures.

In addition to all its other problems, the proposal is alienating the public from the whole concept of superannuation.

We will need a lot more information from the Commonwealth before being able to respond to the application of the surcharge to the State public sector.

Media contact: Hugh Ryan 481 3244