Australia's government plans to reduce tax exemptions on retirement savings of some of the richest people in the country as it seeks to balance the budget in light of declining revenues.
Under the plan, designed to save about 900 million Australian dollars (U.S. $ 940 million) over four years, the tax-free threshold gains on pension assets will be capped at $ 100,000. Earnings above that level will be taxed at 15%. Currently all income from the assets backing the Australian retirees, such as dividends and interest, are exempt from tax. If approved by parliament, the changes will begin on July 1, 2014.
The contested measure, only five months after a general election, is presented as minority Labor government of Prime Minister Julia Gillard is grappling with falling tax revenues and resource companies as a mining boom is fueled growth during more than a decade slows.
The main conservative Liberal-National coalition, tipped in polls of likely voters to win the vote September 14 opposes any change in pension tax laws.
Despite dealing with lower tax revenues, Ms Gillard has promised more funds for education and health reforms in a bid to win back working-class voters, who have traditionally formed the basis of support from Labour.
In December, the government was forced to abandon a campaign promise to return the budget surplus this year. Economists estimate Treasurer Wayne Swan forecast a budget deficit of about A $ 20 billion at the time of issuing the annual budget on May 14.
The contested measure, only five months after a general election, is presented as minority Labor government of Prime Minister Julia Gillard is grappling with falling tax revenues and resource companies as a mining boom is fueled growth during more than a decade slows.
The main conservative Liberal-National coalition, tipped in polls of likely voters to win the vote September 14 opposes any change in pension tax laws.
Despite dealing with lower tax revenues, Ms Gillard has promised more funds for education and health reforms in a bid to win back working-class voters, who have traditionally formed the basis of support from Labour.
In December, the government was forced to abandon a campaign promise to return the budget surplus this year. Economists estimate Treasurer Wayne Swan forecast a budget deficit of about A $ 20 billion at the time of issuing the annual budget on May 14.
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