The Australia Institute stated superannuation and housing tax breaks for those in higher income brackets are costing the budget 10 times as much as leaving the GST off fresh food.
According to Treasury’s Tax Expenditure Statement, which was released late Friday afternoon, the cost of the concessional tax treatment of superannuation fund earnings will rise from $13.4 billion in 2014/2015 to $25.8 billion in 2017/2018.
The total cost of all of the different tax concessions for superannuation is forecast to hit $45 billion by 2017.
“The Abbott government says it will do anything to repair the Budget bottom line, but their definition of anything does not extend to closing the loopholes which are draining tens of billions of dollars from the budget each year,” said Dr Richard Denniss, executive director of The Australia Institute.
The Treasury also forecast that the cost of taxing income from capital gains at half the rate of other forms of income will surge from $5.8 billion to $7.6 billion over the same period.
The vast majority of the benefits of these concessions go to the wealthiest 20 per cent of households, The Australia Institute stated.
“If Joe Hockey was serious about getting the Budget back into surplus he would be cracking down on the loopholes… that allow multi-millionaires and some big foreign companies to pay zero tax in Australia,” Dr Denniss said.
John, be careful what you wish for!
What would our society look like if ALL retirees today were eligible to get age pension:).
Who does think that there will be enough money in government coffers to pay out the age pension each fortnight?
We probably need to consider the franking credits that are being paid to super funds in pension mode. Franking credits were ment to stop double taxation not to transfer the company tax paid by banks to super fund tax free pension beneficiaries. Could be leaving the government with no tax received from banks.
The Australia Institute should learn about tax theory and go and read John Stuart Mill on terminable incomes and William Vickrey. Labour incomes need superannuation to spread income over a working life and to support dependants. Adam Smith saw that a labourer’s income had to support himself, his wife and his children and his old age. Superannuation is just a form of lifetime income averaging. Labour incomes are not perpetual rents which can be taxed entirely away, not, at least, if you don’t want a destitute and vanishing population.
According to an article in the AUSTRALIAN the top 1% pay 17% of the tax take, the top 10% pay 46%, or for the mathematically inclined, almost half.
The bogeyman wealthy argument is so puerile it’s shameful on the media and any public body that ignores the freely availed tax information.
Well said Russell. This smacks of the hypocrisy of almost all Australians. Fix the budget but as long as I don’t pay any tax and none of my free govt services or welfare gets cut.
If there was any merit to the so called academic quality of this it would have also examined how many people are a burden on the govt and how few evil wealthy ppl there are.
The 2% high income tax raised just 25% only of the increase only in the health and welfare budget.
Mercer have shown that the tax concessions on about $600k are equal to aged pension costs. The age pension btw is not a right ’cause I paid my taxes’ it is a safety net to prevent poverty in old age.
Everyone in this country whinges with their hand out, almost noone seems to have a view outside their own greedy self interest, no matter their level in the socio-economic strata.
“Tax Evaders” (in caps): make it sound like an evil cross between Darth Vader and Space Invaders. In reality, its your mum and dad, or grandad & grandma, who’ve paid tax all their lives and are following The Rules to structure their financial affairs sensibly, so that their retirement capital lasts the rest of their lives … evil bastards!
The Age Pension followed by compulsory contributions to Superannuation was designed so that all Australian citizens could have dignified twilight years, not so that Tax Evaders could manipulate the scheme to further their wealth.
If we really must do something on this score of people having very very large super balances in retirement, the better response would be to lift their minimum pension pay out rates above some threshold, say $4m per person you pay double the normal minimum pension.
A taxpayer on $50k pays $8788 in tax
A taxpayer on $300k pays $117k.
I.e more than 13 times more.
Heaven forbid then they should chuck some money into super and save say $10k in tax and only pay 12 times more than the low earner!
It would be a once only expenditure to return to a reasonably fair society which would result in Billions saved over the next five years.
It is also costing we other Australians ten times more to provide Tax Beaks for the wealthy than it would cost us if those Tax Evaders were paid the full Age Pension for life.
I believe most, including people with $10m plus in super, would be OK with some extra tax paid. The problem has been coming up with a good solution. The catch is that changes require all super software programs to be amended, new staff in Government departments to administer it, changes to trustee practices, advisers costs in discussing with clients, etc. My understanding is ideas end up costing more than the tax they generate, as so few people have $10m or more in super. The super surcharge was removed as it was inefficient. So the call to do something is uninteresting as no-one is disagreeing. What would be great is a solution.
Great to have a academic view on super and housing….not! In the real world however, people appreciate the governments that keep their hands off ones primary residence. There are some things its better that government doesn’t touch and in Australia, residential housing is one. In the real world, people will reduce their superannuation savings to the minimum, once they start seeing governments changing the rules on superannuation. The Australian Institute should perhaps put more energy into growing the economic pie and not redistributing it.
Hi All,
Change the tax base.
Company tax 30%
Change Personal tax to 30% and then have a wealth tax say 10% above average wage then 10% above twice average wage.
By saying the 30% Personal tax rate can be used as the maximum tax deduction for Super, Negative gearing etc. The Wealth tax cannot be reduced.
And again I will say introduce a 30/20 Infrastructure Green Bond Superannuation in pension mode. Grand fathering should be iliminated over a five year period.
Rick