Australia's taxation arrangements for retirement saving are among the most complicated in the world. It is almost unique in applying tax at all three possible points in the retirement saving cycle: contributions, earnings and benefits. Starting from the proposition that the 'best' pension tax is to tax benefits under the personal income tax, this paper proposes a 'withholding tax' arrangements which would have impacts on individual contributors equivalent to a benefit tax, while altering the time profile of tax collections to address cash-flow concerns on the part of the revenue authorities. Simulations are presented to show that individual contributors benefit from the proposed reform, and that equity across contributors in different wage bands is broadly maintained.
|Number of pages||12|
|Journal||Australian Economic Review|
|Publication status||Published - 1999|