AMP Capital warns on unintended super tax burdens
Limiting superannuation tax concessions without a reduction in marginal tax rates will further burden taxpayers and reduce incentive to work, according to AMP Capital.
AMP Capital chief economist Shane Oliver said political momentum appears to be building in regards to limiting some tax concessions, including those relating to superannuation.
“Putting aside the specific merit of such changes, it is very important that they be considered in the context of the whole tax system,” said Mr Oliver.
“Even with the various tax concessions, the Australian income tax system is highly progressive compared to other comparable countries.”
Mr Oliver said Australia’s marginal tax rates are relatively high with the top marginal tax rate at 49 per cent, versus 33 to New Zealand or 20 per cent in Singapore.
“Despite the tax concessions, this is leading to just 17 per cent of tax payers paying a high 63 per cent of income tax revenue raised by Canberra,” he said.
Limiting tax concessions without reducing marginal tax rates and/or increasing the income thresholds, he said, will only see this burden increased further.
“[This] in turn will reduce work incentive and reduce the size of the economic pie, making it even harder to sustain government services and social safety nets,” he added.