Why deeming rate is not justified

What is the deeming rate?

The deeming rate is the amount the government deems your income to be from your financial assets. It calculates the amount of income received from a financial asset regardless of the actual return.

This calculation is used for the pension income assessment and can affect how much someone receives through their pension.

A pensioner can earn up to $172 a fortnight before their payments are reduced.

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The deeming rate for singles is 3.25% for assets over $51,200 and 1.75% for those under that threshold – but more detail on this later.

(https://www.theguardian.com/australia-news/2019/jul/09/deeming-rates-explained-how-they-work-and-why-pensioners-want-them-changed)

Why it is not justified?

This financial assets especially from bank savings accounts are hard earned money that are already taxed. Savers should not be punished for savings. Banks need savings so that they can lend to businesses to create employment which is one of the main job of government. Without these savings, businesses cannot borrow or expand and employment level will be low. Government is wrong to tax people based on deemings rates. Government should impose a wealth tax on people with assets above $10million. This type of people hoarded too much wealth which is counterproductive.