Thursday, February 26, 2015

Super. Greens offer Abbott $13 billion

The Greens are offering the government a $13 billion budget saving. All it has to do is ditch its commitment not to touch superannuation before the next election.

The plan would tax superannuation contributions on a progressive scale rather than the present flat rate of 15 per cent and 30 per cent for workers earning more than $300,000.

Australians on the 19 per cent marginal tax rate would pay 4 per cent on their super contributions, Australians on the 33 per cent rate would pay 15 per cent, Australians on 37 per cent would pay 22 per cent, and Australians on the 45 per cent rate would pay 30 per cent.

As a supporting measure, the policy would also clamp down on "churning" wages through super funds. It will no longer be possible for Australians over 55 to get a tax benefit just for putting their salary into a super fund while drawing an equivalent wage from the same fund.

The change is backed by the Australian Council of Trade Unions, the Australian Council of Social Service, Anglicare and the Australia Institute. It is builds on a recommendation of the Henry Tax Review.

In the election the Coalition promised not to make any "unexpected detrimental changes" to superannuation.

An independent costing prepared by the Parliamentary Budget Office finds it would save $3.4 billion per year... Over the four years the saving would amount to $13.6 billion.

"The Greens are genuine about raising revenue. We can support people on lower incomes and at the same time raise billions to pay for schools and hospitals just by making sure that the rich pay their way on superannuation," said Greens leader Christine Milne.

The proposal would also fix an inequity. At the moment Australians earning less than $19,400 pay no tax on their income but the standard rate of 15 per cent on their super contributions. The proposal would ensure they paid no tax on their super contributions.

It leaves untouched the highly concessional 15 per cent rate of tax on super fund earnings. Dividend imputation means many super funds pay as little as 7 per cent tax on their earnings.

In The Age and Sydney Morning Herald

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