Even with optimistic economic and revenue forecasts for the later years of the budget cycle, the 2015 budget shows the government still racking up deficits for the foreseeable future. If Australia’s current economic slowdown continues, or there is a global economic event that sends us near or into recession, the return to surplus will be delayed into the very long term.
And yet, for reasons best known only to itself, the government continues to refuse to examine superannuation tax concessions, which even the super industry itself believes needs to be reviewed. While the government might insist that any overhaul of super tax concessions amounts to an increase in tax, the reality is one of taxation equity: the superannuation tax system enables high-income earners to pay far less tax on their income than lower-income earners. Moreover, the gap between what middle-income Australians pay via the tax system, and what wealthy superannuants pay is far in excess of what is required to encourage Australians to save for their retirement.
Last night’s budget papers demonstrate the scale of the problem super tax concessions represent. This is how much income tax we are losing to super:
This is a policy that will soon be costing us $50 billion a year in lost revenue. For a country that can’t see a way back to surplus any time soon, it’s a luxury we can’t afford.