The Rudd government announced yesterday a sweeping set of tax reforms as part of the Henry Tax review.
Highlights of the package include increases in superannuation, tax relief and less red tape for small business, as well as a cut in company tax and a greater investment in infrastructure.
These initiatives will be bankrolled by a Super Profit Tax on the mining industry, which should net $12 billion over four years.
This money will be used to distribute a $500 superannuation bonus to 3.5 million low-income workers.
Workers over 50 with lower super balances will be given more generous contribution caps to allow them to make catch up contributions.
The superannuation guarantee will be gradually increased from 9 to 12 per cent.
A phased cut in the company tax rate to 28 per cent will be put in place for business, with small businesses enjoying a head start with the 28 per cent rate applying from 2012-13.
Small businesses will also benefit from a new instant write off for assets worth up to $5,000 and the simplification of depreciation claims.
The Federal Government has also committed to increasing its commitment to infrastructure by making annual contributions to a new ongoing infrastructure fund from 2012-13, starting at $700 million.
The Federal Opposition has branded the reforms a “Trojan Horse for higher taxes” and has described the minor changes to the tax system as a tax grab rather than reform.
“Yet again, there’s more talk than action,” Opposition Leader Tony Abbott said in a joint statement with his treasury spokesman Joe Hockey and finance spokesman Andrew Robb.
“He’s put higher taxes on easy targets but put off the hard decisions on cutting out-of-control government spending.”
Former Prime Minster Paul Keating says the changes to super will give Australians the best retirement plan in the world.