The Opposition has promised to give some tax relief on interest earned on savings. The details are unclear, but Opposition Leader John Howard said it would involve a tax break of about 25 per cent and would be means-tested. He was immediately attacked by the Government which said it would cost at least $1 billion a year.
Tax was neutralised early in the campaign by both major parties. The Coalition said there would be no new taxes and Labor said the total tax take would stay the same. After that tax has only featured as an issue briefly, when Prime Minister Paul Keating asserted the Government would be able to find an extra $800 million by chasing the very rich for tax they had avoided through complex trusts. This was met with justified scepticism. And without a concurrent announcement of retrospective remedial action the avoiders were warned and could move their money.
In short, both parties have only sniffed at the edges of what should have been a fundamental issue. The tax system needs significant change. The relief on interest is but a small step in the right direction. To date, saving money in the bank has been a mug’s game. After allowing for the tax on interest and inflation, you go backwards.
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