Treasury spokesman Angus Taylor and shadow finance minister Jane Hume revealed that this unlegislated tax is propping up the budget by $5.5 billion in the forward estimates and $21.6 billion over the medium term.
In a statement sent to SMSF Adviser, Taylor said: “Labor’s changes to super are an unindexed, undemocratic wealth tax”.
“There is no pathway to pass this bill, yet it is propping up a budget where Labor’s decisions are costing $4 for every $1 of revenue,” the shadow treasurer said.
“Treasury modelling released under FOI showed that even a 20-year-old earning an average wage today will be captured by this wealth tax because of Labor’s refusal to index the measure.
“Under Labor’s plan, 2 million Australians under 25 will see taxes double on their retirement savings.”
Hume emphasised that Labor has failed to effectively manage the budget or address underlying structural pressures, accusing the government of hiding behind “zombie” measures to obscure the full extent of their mismanagement from Australians.
“What we suspected in May has now been confirmed – Labor doesn’t have the ticker to make the tough decisions to keep spending under control,” she said.
Namely, on Monday morning, the government revealed that the underlying cash surplus was $15.8 billion in the 12 months through June 30 this year, or 0.6 per cent of the gross domestic product. This follows a surplus of $22.1 billion (0.9 per cent of GDP) delivered in 2022–23.
However, Australia faces a possible deficit of $28 billion this financial year and a $43 billion deficit the year after.
According to Hume, the government is now using its plan to tax unrealised gains in superannuation to “hide the true state of the budget”.
Hinting that Labor had promised to take the controversial tax on unrealised gains to the election, the fact they have “already booked it in the budget” shows they can’t be trusted, Hume said.
“They’ve shown they have no discipline. But now they’ve confirmed they won’t be honest with Australians as well,” she added.
Last month, a group of independent MPs identified the taxation of unrealised gains and the forced sale of illiquid assets as their primary concerns, prompting calls for amendments to the Division 296 tax. These issues are also the main reasons for the delay in the legislation.
There is such a simple solution. Leave all the defininitions of taxable income unchanged and simply introduce a progressive tax rate for superfunds, say existing 15% up to $150,000 per annum and 30% on income above that level.