Industry Super Australia (ISA) has joined the chorus of commentators proclaiming that Australia’s superannuation concessions are inequitable. From The Western Australian:
In its submission to the Tax White Paper, the industry super sector said taking into account current policies for the age pension and super, it estimated 45 per cent of all Australians now aged between 25 and 29 would not have enough income to enjoy a comfortable standard of retirement…
According to Industry Super, the concessional tax arrangements for super are overwhelmingly benefiting those with the highest incomes.
…current tax arrangements around super mean the richest one per cent will get a $5 million government handout, while the lowest paid will end up handing over thousands in extra tax to Canberra…
High-pay couples now aged between 25 and 29 will end up getting $600,000 a year in income by retirement.
ISA’s findings follow those of the Australian Institute of Superannuation Trustees, which estimated that wealthy superannuants will receive double the level of government support than most of their middle-income counterparts.
Of course, we should not be surprised by these findings, given the 15% flat tax on superannuation contributions overwhelmingly benefits those on higher incomes, whilst penalising the lowest paid workers (see below table and chart).
Unfortunately, instead of undertaking genuine tax reform – by unwinding concessions on superannuation, negative gearing, and the capital gains tax discount in exchange for lower income taxes – the Abbott Government has chosen to maintain the status quo, continuing the “age of entitlement” for its wealthy constituents.
