Prime Minister Anthony Albanese’s superannuation changes described as ‘wealth tax’

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Prime Minister Anthony Albanese’s superannuation changes described as ‘wealth tax’

Anthony Albanese's planned super shake-up has been described as a 'wealth tax' that could discourage Australians from investing in their retirement.Th

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Anthony Albanese‘s planned super shake-up has been described as a ‘wealth tax’ that could discourage Australians from investing in their retirement.

The prime minister and Treasurer Jim Chalmers are going to the next election with a plan to double the concession rate of tax for those with $3million or more in superannuation savings. 

Should Labor win re-election, the wealthiest 0.5 per cent of the population would see their concessional tax rate on super contributions double to 30 per cent – up from 15 per cent, as of July 1, 2025.

The Centre for Independent Studies, a conservative think tank, has described this as a ‘wealth tax’ that would discourage the rich from investing in super in order to avoid paying more tax.

Anthony Albanese's planned super shake-up has been described as a 'wealth tax' that could discourage Australians from investing in their retirement (the Prime Minister is pictured right with his girlfriend Jodie Haydon)

Anthony Albanese's planned super shake-up has been described as a 'wealth tax' that could discourage Australians from investing in their retirement (the Prime Minister is pictured right with his girlfriend Jodie Haydon)

Anthony Albanese’s planned super shake-up has been described as a ‘wealth tax’ that could discourage Australians from investing in their retirement (the Prime Minister is pictured right with his girlfriend Jodie Haydon)

Robert Carling, a senior fellow, likened it to a land tax where someone was taxed on unrealised capital gains, in a submission to Treasury that was made public on Thursday.

‘In effect, the proposed calculation of earnings makes the new tax a wealth tax – or at least, a tax on the annual increase in this component of an individual’s wealth,’ he said.

‘There are no other comparable taxes in Australia apart from the states’ land taxes.

‘Thus, for the first time in the Australian system, it includes unrealised capital gains.’

The Centre for Independent Studies argued Labor’s proposal would discourage the wealthy from investing in superannuation.

The Centre for Independent Studies, a conservative think tank, has described this as a 'wealth tax' that would discourage the rich from investing in super in order to avoid paying more tax (pictured is Sydney's Royal Randwick Racecourse)

The Centre for Independent Studies, a conservative think tank, has described this as a 'wealth tax' that would discourage the rich from investing in super in order to avoid paying more tax (pictured is Sydney's Royal Randwick Racecourse)

The Centre for Independent Studies, a conservative think tank, has described this as a ‘wealth tax’ that would discourage the rich from investing in super in order to avoid paying more tax (pictured is Sydney’s Royal Randwick Racecourse)

‘Another consequence will be that those affected by the change will do their best to avoid it by reducing their total super balance below $3million — or even getting out of super altogether,’ it said.

The federal government argues the proposal would only affect 80,000 Australians, but the Financial Services Council, which represents retail super funds, argued it would hurt 500,000 people in coming decades, including 204,000 now under 30, unless it was indexed for inflation.

Labor’s Better Targeted Superannuation Concessions proposal, announced in March, is designed to save the Budget $2.3billion a year in forgone revenue.

But the Centre for Independent Studies said the policy would only encourage tax avoidance.

‘Any claim of significant additional revenue is dubious; as the new tax is likely to be met with strong tax-avoiding behavioural responses as listed above,’ it said.

‘In summary, the government’s proposal should be shelved and reconsidered only in the context of a broader tax reform package.’

Mr Albanese, ahead of the 2022 election, promised no changes to super, which means this policy would have to be taken to an election before it proceeds.

‘We’ve said we have no intention of making any super changes,’ he said as opposition leader.

The rate of compulsory employer super contributions rose by half a percentage point to 11 per cent on July 1, and is increasing by half a percentage point increments annually until it reaches 12 per cent in July 2025.

Former Liberal treasurer Peter Costello had introduced generous tax concessions for super contributions in 2006.

The Australia Institute think tank estimated overall super tax concessions cost the budget $52.6billion a year, almost as much as the $55.3billion spent on the aged pension.

An increase in tax rates for super contributions would mark the most punitive change to the rules since compulsory super debuted in 1992 under a Labor prime minister, Paul Keating. 

Source: | This article originally belongs to Dailymail.co.uk

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