What Julia’s coup may cost you

Like most things in this world, Julia Gillard’s coup comes with a price tag.

And this one has your name on it.

You might end up worse off in retirement than you should have been.

Or you could end up paying more tax.

There is still some doubt about how big this price tag will be.

The word substantial, though, would not be misplaced.

The government said, back in May, that it would gradually lift the compulsory superannuation contribution rate, from its present level of 9 per cent, to 12 per cent.

It also said, then, that it planned to gradually cut the company tax rate, for small business people, from 30 to 28 per cent.

However, the Treasurer, Wayne Swan, also issued a blunt warning at the time, about this package of measures, which also included a plan to making putting in your annual tax return much simpler.

As most Australians now employee an accountant, at a cost that commonly reaches $800 a year, that small change, too, offered substantial savings.

What, though, was Wayne’s warning?

In his own words, it was this:”…the package is dependent on the successful implementation of the Resource Super Profits Tax.”

As that has now been thrown into doubt, the 12 per cent superannuation levy and the cuts to company tax for small business have too.

The are the inevitable consequences of what Julia Gillard and her backers have done.

Ms Gillard says she expects Australia’s miners to pay more than they have been.

However, the 40 per cent super profits tax, which Kevin Rudd proposed, is effectively dead in the water.

One of the government’s chief negotiators, in present talks with the miners, Martin Ferguson, says more progress has been made than many observers recognise.

That might be true.  It is now clear, though, that the package of benefits, that the super profits tax was meant to fund, will now be cut back sharply.

So what does all that mean to you?

On the government’s own figures, if you are now a 30 year old employee, the loss of that 12 per cent compulsory super contribution would cost you no less than $108,000, on the day you retire, at 65.

That is a substantial amount, on any calculation.`