About 16,000 higher-end superannuation earners will benefit from government moves to clarify tax laws by either ditching or finally enacting long-intended changes.
But smokers have not been so lucky and will pay up to $2.50 more for a packet of 20 cigarettes from December 1.
The Abbott government has elected not to proceed with Labor’s plans to tax superannuation earnings above $100,000.
It is likely to attract some criticism as the government will proceed with scrapping the Low Income Superannuation Contribution, which pays up to $500 on top of employer contributions made to superannuation for workers earning below $37,000 a year.
The decision is one of nearly 100 tax changes previously announced by past Labor and Liberal governments, dating back a dozen years.
Federal cabinet has signed off on an ambitious agenda of taxation law deck-clearing to end what it has called ‘‘massive operational uncertainty for business and consumers’’.
But the decisions will come with costs either in financial terms, where revenue is to be forgone, or in political terms, where the Coalition has elected to bank the money despite previously criticising the taxes.
One such case is expected to be the dramatic increases in federal tobacco excise amounting to a 60 per cent rise over four years and returning $5.2 billion to Canberra in revenue.
Also likely is the retention of Labor’s plan to link excise increases to wages growth rather than lower consumer price index movements.
Mr Hockey, who has been working with his Assistant Treasurer and former Treasury official, Arthur Sinodinos, will announce the government’s position on Wednesday, pledging to ‘‘resolve all policies relating to these matters by December 1, 2013’’.
Many measures will be scrapped while others will be introduced and some may be modified.
Among the 92 announcements are seven measures that definitely will not be proceeded with.
Three of those are:
■ Changes to tighten fringe benefits tax compliance rules at a saving to Canberra of $1.8 billion over the four years of the budget.
■ Changes to the taxation arrangements applying to so-called ‘‘lumpy superannuation’’, which would see higher taxation rates apply to earnings over $100,000 in any one year.
■ The thin-capitalisation changes that give companies preferential tax treatment when they expand overseas and are forced to compete with so-called SOE – state-owned enterprises.
The government intends to proceed with 18 measures as announced, and another three will be ‘‘significantly amended’’.
The government has ‘‘a disposition not to proceed with’’ a further 64.
They will be the subject of intensive consultation with interested parties led by Senator Sinodinos.
