Tony Abbott’s “captain’s call” not to change superannuation concessions, the capital gains tax discount, or negative gearing has isolated the Coalition, with business groups, industry groups, welfare groups, seniors groups, and the ACTU uniting yesterday to call for “urgent” action at the National Reform Summit. From The AFR:
…the summit urges that agrees “reforms should consider changes in both superannuation tax arrangements and age pension arrangements with particular attention to their interaction to improve fairness, efficiency, adequacy and sustainability”…
It suggests super tax concessions are being used as means to minimise tax, rather than saving for retirement, and that this comes at a cost to government and should be curtailed.
“There is widespread concern that the way these concessions are delivered is inconsistent with the purpose of the retirement income system,” it says.
“Any review should ensure the design of the tax concessions is consistent with the objectives of the retirement income system”…
It alludes to, but does not specify, the need to increase the GST, recommends replacing stamp duties with a land tax, and takes aim at capital gains tax concessions for housing investors and, indirectly, negative gearing…
So here we have a Government that talks tough on “ending the age of entitlement” and the need to reign in the Budget deficit pushing against the tide and endorsing Australia’s inefficient and inequitable tax concessions, which cost the Budget many billions of dollars in foregone revenue and overwhelmingly benefit the wealthy.
And because of this revenue black hole, ordinary taxpayers face ever-rising tax bills as fiscal drag pulls them into higher tax brackets, raising their average tax rates, and/or ongoing cuts in public expenditure and services.
As we keep arguing, the Coalition should have pulled the trigger on Abbott when it had the chance. Instead, it now finds itself against the wall with fiscally unsustainable tax policies that have been universally condemned by seniors groups, business groups, unions, economists, and policy experts alike, and will severely damage the Coalition’s economic/Budget credentials for as long as it remains in office.
