The Australian Council of Social Service (ACOSS) said on Thursday the federal government cannot afford to keep giving the top 20 per cent of income earners half of all superannuation tax concessions if it wants the superannuation system to be effective in helping the majority of people to have a decent standard of living in later life, and have the revenue to pay for vital services for an ageing population.
‘Right now, the superannuation system has become one of the most favoured tax minimisation vehicles for high net worth individuals, while it fails to deliver decent savings for the great majority,’ said ACOSS CEO Dr Cassandra Goldie.
‘To reduce poverty and future pressures on the age pension, we need to target super tax concessions so that they help saving by people on low to middle incomes, not wealthy people who will have no trouble securing their retirement future.
‘Chair of the Financial Services inquiry David Murray is right to question whether superannuation is doing the job it is supposed to do. Our superannuation tax concessions are inefficient, inequitable and wasteful.
‘When the top ten per cent of male taxpayers receive more from super tax concessions over their lifetime than they would if they received the full rate of the age pension in retirement, we have a system that is not achieving its aims of ensuring adequate retirement incomes and taking the pressure off the age pension.
‘We can no longer afford to allow the majority of super funds to pay no tax at all of their investment incomes, when any other investment would be taxed.
‘The government should shut down tax schemes which allow people over 55 years to churn their wages through their superannuation accounts, reducing their income tax rates to 15 per cent, at most.
‘The fact is there are alternatives to the current budget proposals on the table which overwhelmingly hurt people on the lowest incomes. Instead of cutting future age pensions for those with the least, and penalising low income people on their super contributions, the government should reduce super tax breaks for those with the most.’