As I write this the Dow Jones Industrial Average is knocking on the door of the
11,000 level and the ASX 200 is closing in on the 5000 level. Australia continues
to be one of the best performing economies in the developed world with continued
strong demand for our resources...
...As the market climbs a wall of worry investors need to be mindful of their asset
allocation. There is still a large amount of money in cash and investors who procrastinate
may well miss the boat. As always I suggest investing regularly to reduce your timing
risk.
With the Labor Federal Budget looming I encourage our customers to consider topping
up their superannuation contribution to the maximum level and making any undeducted
contributions prior to the budget. Certainly some of these areas are seen to benefit
the “well off” and in an election year populist policies are likely
to emerge.
The government is keeping a tight lid on the Henry Tax Review while it prepares
its response. There is no doubt that changes to the tax system in an election year
are politically dangerous. However it appears that Prime Minister Rudd is succumbing
to pressure and we may see a release of the report before too long. Speculation
is that it might be released around the same time as the budget.
The effects of this comprehensive tax review will be far reaching and will probably
be implemented over many years. However with the governments huge spending during
the GFC producing a significant deficit and huge sums being promised to reform health
care it is unlikely that Australians will be paying less tax in the future.
The States are cash strapped and are refusing to sign off on the Prime Minister’s
health reform plan until they see the Henry Tax Review. Like most capitalists I
am not a fan of taxes and to quote the late Kerry Packer:
Of course I am minimising my tax. And if anybody in this country doesn't minimise
their tax, they want their heads read, because as a government, I can tell you you're
not spending it that well that we should be donating extra!
The scandals associated with the Building the Education Revolution Program and the
Home Insulation Program clearly illustrate this point.
This is an excerpt of Michael Lannon's monthly commentary. Read the
full commentary here.
Michael Lannon
Managing Director