Reports of last week’s ‘mini summit’ chaired by the Prime Minister, if indicative that various interest groups are prepared to recognise that everyone can win from a ‘whole-of-economy’ approach, are very exciting for the future of superannuation.
The idea that economic growth and improvements in productivity can benefit everyone should also extend to the idea that a more efficient savings tax system can benefit everyone.
In particular, a more efficient superannuation tax system would result in the Government being more able to raise Age Pensions per person; and changes in the income tax scales can allow the introduction of a fairer progressive taxation of superannuation contributions.
Any serious review should recognise the following facts:
1. Age Pensions cost more than super tax concessions and so a better and more efficient super system can lead to budget savings in Age Pensions and so put the Government in a better position to raise the Age Pension for those who need it;
2. A more efficient tax system for super savings will give better results per dollar of tax concession;
3. Adding a new tax or otherwise penalising super earnings in pension phase does not improve the tax efficiency of super nor help more people save adequately in super; and
4. Our income tax scale is currently one of the world’s most progressive, but improving this situation would better allow the Government to make some super taxes progressive and thus improve super effectiveness for those on lower incomes.
READ THE FULL DOCUMENT, Towards a “Win-Win” Solution on Super Tax
