There has been a lot of talk recently about cutting super tax concessions to the rich.
We are told that $30 billion a year is lost in tax concessions, a huge chunk of which goes to people who don’t need it.
But while righteous indignation has been voiced on both the left and the right (talkback radio host Alan Jones is one proponent), there has been little or no effort to spell out exactly how this could be addressed, and exactly how much it could save.
Until now, that is.
On Thursday, the Australian Greens became the first group to lay out a detailed policy aimed at clawing back some of that $30 billion.
A progressive tax
The Greens argue that, rather than charge all superannuation contributions a flat tax rate of 15 per cent regardless of income, as is now the case, super should be taxed progressively.
They say their policy would save the government $10 billion over the forward estimates, something which all sides of politics would welcome.
Greens leader Christine Milne said: “Superannuation in Australia has become a tax haven for the wealthy. It should be a way of delivering a comfortable retirement for everyone.
“The superannuation system is being rorted by the mega rich, who can drastically reduce their tax by funnelling money into super that would normally be taxed at the highest marginal rate.
“The super wealthy in Australia are avoiding hundreds of thousands in tax using these superannuation loopholes. It’s people on lower incomes that shoulder the burden.”
Who wins, who loses?
The first thing to note about this tax is that, for the vast majority of Australians who earn between $50,000 and $100,000 a year, nothing would change.
Only those who earn more than $100,000 a year would be worse off. Those who earn under $50,000, meanwhile, would be significantly better off.
Interestingly, those who earn more than $300,000 would be either no worse off than before, or a little bit worse off. That’s because those on $300,000-plus salaries already pay 30 per cent on their compulsory super contributions.
We applied the Greens’ policy to six different annual incomes to see exactly how it would change things. This is what we found:
So what are its chances of getting up?
The Greens’ policy is a clear exercise in wealth distribution. As such it is unlikely to appeal to a Coalition government.
On the other hand, its budget-saving features will certainly appeal to a government that has made “repairing the budget” its number one priority.
When asked about the policy on Thursday, Treasurer Joe Hockey was guarded, opting to attack an unrelated Greens policy rather than address the issue.
“The Greens are obviously welcome to put forward proposals,” Mr Hockey told ABC Radio National.
“I mean, it’s very hard … to take them seriously when they’re the only Green Party in the world that actually votes against an increase in fuel excise.”
Mr Hockey’s avoidance of the question is telling.