Super surcharge a mistake – Costello

Peter Costello, in one of his last public appearances before retiring from Parliament, has sought to defend his record on the superannuation system. He says that scrapping taxes on super payouts and overhauling contributions taxes were as significant as the introduction of compulsory superannuation.

However he admitted that he regretted introducing, nearly a decade ago, the now defunct super surcharge. The surcharge (which he always denied was a tax) was levied on the super funds of high income earners and sought to introduce equality into the super system but imposed too much regulation.

”I regretted it ever after – the complexity of the system was just awful,” Mr Costello told a Super Ratings conference in Melbourne.

Mr Costello was speaking at the Super Ratings conference in Melbourne

Most don’t change banks despite unfair fees

Australians view bank fees as a ‘rip off’ yet only one in ten have closed accounts after incurring charges they deemed unfair.

teller machine pick-pocketting customer

Only a minority of people (22.5%) are annoyed with themselves when they incur charges on their credit cards, transaction accounts and home loans.

Most people complain to the relevant organisation when stung with fees outside normal bank fees with 70% giving their financial institution an earful.

Almost one in four complain to friends or family (23.3%) while nearly half demanded a refund (46.6%).

The findings stem from a CoreData survey of 1,366 people on behalf of

Nine out of ten respondents have an average of two credit cards. Half of them usually pay the full amount of their bill.

33.5% of card holders are unsure of fees and charges they might incur due to late payment, yet, 78.7% of them know how many interest free days they have on their card.

Most respondents felt ripped off by their credit card provider, home loan supplier or transaction account institution when they failed to make payments and incurred fees and charges.

43.5% of transaction account holders have been charged overdraft and/or dishonour fees in the last twelve months.

The majority of transaction account holders who have been charged fees and interest feel they were ripped off (86.7%) and many want to close the account.

A further 65.1% wanted to close their account.

More than half of the respondents (54.7%) currently had a home loan.

For those who had been late making a payment the majority felt the fees incurred were unreasonable.

Only with credit cards, were users more likely to see themselves as partially responsible.

Lib’s tax cuts – some early analysis

Professor Patricia Apps, the professor of public economics at Sydney University, says middle income earners will be paying higher effective marginal tax rates than the Government claims.

While middle income earners will get a tax saving of around $33 a week over three years from next July, it is only a fraction of what the rich will get.

Professor Apps’ analysis of the tax cuts announced on Monday shows wealthy people earning $180,000 are getting tax cuts fives times higher than those on average earnings of $60,000.

“This ultimately means the middle is being given an increasing tax burden,” she said.

“The Government is using bracket creep to get this revenue off the middle and giving it disproportionately to those at the top.”

Her analysis shows that the way the Government has structured the tax cuts is deceptive.

The Government’s tax scales show people earning between $30,000 to $60,000 will face top marginal rates of 15c or 30c.

She says in reality their marginal tax rates will be 4c in the dollar higher.

This is because of the withdrawal of a tax subsidy to low income earners, the low income tax offset, once a person earns more than $30,000.

This problem arises because the Government has refused to raise the tax-free threshold, set at $6000 for all taxpayers.

Instead, it has effectively raised the tax-free threshold of low income earners by raising the low income tax offset, allowing them to earn $16,000 before they pay tax by 2010.

The Government starts withdrawing the low income tax threshold once someone earns over $30,000 at the rate of 4c in the dollar.

Professor Apps says this has the effect of raising their marginal tax rate by 4c.

The low income tax threshold withdrawal applies to everyone earning between $30,000 and $60,000 in 2008-09, and by 2010 will extend to people earning up to $67,500.

“The only reason for using the tax offset is to take it away from the middle and shift the relative tax burden to average working families,” she said.