Yesterday, the House of Representatives Tax and Revenue Committee delivered its report on how the annual Tax Expenditures Statement (TES) should be calculated.
The committee noted that superannuation can have significant long-term benefits but these are not taken into account by Treasury in the TES.
“The Committee believes that the Statement (TES), in its current form, produces figures on the current costs of superannuation tax concessions without any reflection or analysis about future benefits either to the Government or to retirees. If one of the purposes of the Statement is to inform debate, then the Committee believes that it is paramount that the Statement and related policy analysis should do so in a balanced way,” the committee said.
This argument is consistent with industry views that there needs to be a more holistic and sophisticated approach to valuing tax concessions, with a model that, for example, factors in a reduction in age pension costs.
The SMSF Owners’ Alliance (SMSFOA) has welcomed the recommendation, believing there is a need for a more “balanced” view of superannuation tax concessions.
“[This recommendation] should lead to a more objective policy debate over the economic value of superannuation. This debate is often distorted by media reports and policy papers focusing on the apparent cost of superannuation tax concessions,” SMSFOA stated.
“It is to be hoped the Committee’s report will put an end to alarming headlines proclaiming the $32 billion (and more) cost of superannuation tax concessions, implying that this revenue could be saved if superannuation tax concessions are removed,” SMSFOA said.