The federal budget has (again) changed the rules of superannuation. The aim of superannuation is to encourage savings and reduce reliance on government pensions in our old age. But fiddling doesn’t help. People wonder if their superannuation is safe from government opportunism.
So perhaps it is time to think more broadly about encouraging savings. One option is a progressive consumption tax. Robert Frank discusses the details here. But there are three key points:
- It encourages savings;
- It is as easy (or easier) to implement as our current income taxes (this doesn’t mean it is simple – neither system is simple); and
- It fits recent research on happiness, spending and ‘relative’ consumption.
I will leave the details to the Frank article – but it is worth thinking about before we fiddle with superannuation again in next year’s budget.