Thursday, January 31, 2008

Australians make the best slaves in the world

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According to this article http://business.smh.com.au/aussies-top-super-rich-list/20080201-1piq.html?sssdmh=dm16.300553, “Australians are the world's richest superannuation holders, thanks to a stronger domestic currency and the previous government's decision to allow people a one-off contribution of up to $1 million tax free into their retirement savings”. I guess that’s one way of looking at it, but since we are not the richest country in the world, you might wonder why people would do that? And thus why people from other countries are not? Who is smarter?
I suspect people thought the government decision to cut the 3-times taxation of super as a government intent on reducing tax. But think again – they can just as easily re-apply those taxes if they are short of money. Consider the issues:
Australia’s revenues are tied to commodities, so as long as commodity prices are strong, people have nothing to worry, the government is making a killing on capital gains, consumption tax, etc.
When the economy soars where are they going to go for tax dollars – the rich – so super will likely to targeted. I personally never liked money I don’t control. I dont even monitor it, in fact as I hsve not even updated my address with my super fund from years ago.
Just because a government rescinds a tax does not mean they cannot re-apply it. They can re-apply it without new legislation.
Australians on an average have $63,794 invested in managed funds at the end of the last financial year, up by an impressive 32.4%. By comparison, the value of American managed funds climbed by 8.5% to $43,458 and UK funds rose by 23.2% to $17,515. I dare say the smaller US and UK contribution highlights the same distrust that I have with government. The Australian government gives me no reason for more confidence.
The big increase in Australian super was because the law was relaxed to allow people to put up to $1 million tax-free into their super savings. It strikes me as a carrot dipped in poison. Also why would you want to invest in super since you lose your capacity to leverage that money since super investments cannot be leveraged. Isn’t it a model for paying more tax. No doubt the banks who manage most of the super funds love the scheme, and no doubt they will reciprocate with more party contributions. At a time when fund managers are paid options to gamble with your money… I say no thanks! You are better off investing in your own home which is tax-free and leveraged.
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