Rich savers get the benefits

The tax system provides no incentive for low income earners to save money according to the Henry tax review. 1.2 million low income people who are making superannuation contributions receive no tax benefit at all, because the lowest income tax bracket is now 15 per cent, the same as the tax on contributions. A further 1.2 million people receive gains of only 1.5 per cent, the same as the Medicare levy. Tax concessions for saving can result in high income earners switching their savings from shares to super says Treasury, resulting on no net gain in national savings. The report suggests taxation of savings is inconsistent, with interest on bank deposits being treated harshly, while negatively geared property and shares are rewarded.

Source: The Australian