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Women's group opposes scrapping of low income super contribution
Members of Women in Super have written an open letter to Prime Minister Tony Abbott urging his Government to continue the low income super contribution (LISC).
The group is concerned that if the LISC is withdrawn, Australian workers who earn $37,000 or below per annum will stop receiving a rebate of the tax paid on their super contributions, worth up to $500.
"These workers will receive no tax break on their contributions, paying more tax than if the money was part of their take-home pay," the letter said.
"It is surely unfair that while the highest paid workers receive a tax concession of 30 per cent, the lowest-paid would be penalised for saving for their retirement."
The Federal Government released a draft of the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 on 24 October, in which the repeal of the LISC is included.
The Government has said it will repeal the LISC as it was one of the measures to be funded by the Minerals Resource Rent Tax.
The group said the LISC provided a boost to super savings to more than three million low-income earning Australians, out of which 2.1 million are women. Women have longer life expectancies and need more savings that last longer, it said.
The letter said that with barriers to saving through their working lives such as unequal pay, breaks from the workforce, over-representation in lower-paid industries and hurdles to employment beyond 45 years-old, the LISC would help nearly half the female workforce.
"We call upon your Government to continue this scheme and break the funding link between LISC and the Minerals Resource Rent Tax (MRRT)," the letter said.
"Funding of LISC should be prioritised, as it benefits a third of the Australian workforce and is a crucial policy initiative in working to close the gap in retirement savings between men and women."
With the number of taxpayers in Australia due to halve over the next 30 years, this will put more pressure on future taxpayers to fund the age pension, making super savings more crucial.
Continuing the LISC will help alleviate some of this stress, the letter said.
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