The changes would double the tax on super balances of $3m and over, from 15% to 30%.
The vast majority of Australians can only dream of retiring with a super balance of $3 million. Most people end their working lives with just a fraction of that.
While the superannuation system has enabled the likes of farmers and small business owners to place assets such as farms and properties into their super, the number of those who do that is small and most – if not all – do so as a way of reducing the amount of tax they pay.
This is not what the superannuation system was designed to do.
In the most recent financial year, the Treasury Department estimated the concessions of superannuation earnings and contributions cost the government $51.7bn in foregone revenue. This compares to the cost of the Age Pension of $58.9b.
If the government can convince the crossbench to support these changes, all Australians would be better off.
"The government's proposal to reduce the taxation concession on balances over $3m is a much-needed reform to Australia's superannuation system," said Greg Jericho, Chief Economist at The Australia Institute.
"The prosed changes would affect only 80,000 of the around 17 million people with a super account.
"This financial year the richest 10 percent will receive just over $20 billion in superannuation taxation concessions. This at a time when around 23% of Australian retirees end their working lives in poverty, compared to 11.1% in Sweden and 3.8% in Norway.
"Superannuation tax concessions are designed to encourage people to save and reduce dependency on the age pension, they are not designed to be used by the very wealthiest in society to avoid paying tax."
