Peter Costello’s hypocrisy has turned nuclear, today lecturing politicians to stop meddling with superannuation. From The AFR:
“Increasing taxes on superannuation, which is a long term savings vehicle, usually involves taking now at a cost to be borne sometime in the future”…
“Governments are interested in the here and now – they don’t worry too much about what’s outside the forward estimates”…
As Australia’s population ages rapidly, younger people may be forced to pay more taxes and “future generations will have to pay our debts,” Mr Costello said.
“It will be worse if we take their taxes as well”…
Maybe, just maybe Pete, politicians wouldn’t have to mess with superannuation if you hadn’t meddled with it yourself and made the whole system both unsustainable and inequitable. You know what I am talking about, Pete. Specifically:
- In 2005, you eliminated the 15% contributions surcharge on high income earners, thus ensuring high income earners received an even greater share of the tax concessions (see below table and chart).
- In 2006, you reduced the tax rate on superannuation earnings for those aged over 60 from 15% to zero – a move dubbed by Saul Eslake as “one of the worst taxation policy decisions of the past 20 years”. So while the younger Australians that you supposedly care so much about must pay full income tax on their wages/salary earnings and 15% tax on their superannuation earnings, older Australians get to pay absolutely nothing, thanks to your meddling.
- In 2005, you also introduced generous ‘transition to retirement’ rules, which effectively allows those aged over 50 to lower their income tax – affectionately described in the industry as the super saver’s version of “having your cake and eating it”.
It is precisely your meddling with superannuation that has greatly worsened the equity and sustainability of the retirement system, undermined the progressiveness of the tax system, and blown major holes in the Australian Budget.
So stop lecturing us.
