Richard Denniss, Executive Director of The Australia Institute and long-time advocate of overhaul to the super tax concessions scheme, has welcomed moves on the issue by the Australian Labor Party but says it needs to be the start, not the end of the conversation.
“Providing generous tax concessions to people who are already far too wealthy to qualify for the age pension makes no sense. It is unfair, unaffordable and unsustainable,” Dr Denniss said.
Currently super tax concession cost the budget $30 billion. They are projected to cost $50 billion, more than the entire age pension bill, by 2018. Tax concessions for super are growing at 12 per cent per year while the age pension is growing at 6 per cent.
“The ALP policy announced today will tax less than half of one per cent superannuation members, raise $14 billion (over 10 years), and do nothing to help low-income earners at all. It’s pretty good evidence of just how inequitable this scheme is.
“It could be called a good first step, but unfortunately the Labor Party also ruled out further changes, which means super will continue to be used primarily as a tax shelter by many if Australia’s wealthiest people.
“The main recipients of the inequitable superannuation tax concessions are people who are already too wealthy to ever receive the age pension. The debate about the inequity of the superannuation system will not go away until the perverse inequities are removed.
“That said, the leader of the opposition, the Treasurer, the secretary of Treasury and even the superannuation industry now support the need to reform the system. The Prime Minister is now isolated in his defense of the unfair, unaffordable and unsustainable system of tax concessions for superannuation.
“Tony Abbott asked for bipartisanship on the tax debate. This is a perfect opportunity for the Liberal Party to make good on that goal,” Dr Denniss said.