Super tax skewed too much to high earners
By Jacob Saulwick National Correspondent | smh.com.au | 14 October
Low and middle-income earners could receive boosts to their super savings and the 9 per cent compulsory contribution, the federal minister, Chris Bowen, signalled yesterday.
The Minister for Superannuation said policy should aim to boost retirement savings despite the Henry tax review's finding that existing arrangements delivered "adequate" retirement incomes for most people.
"I believe that adequacy should be the minimum objective for retirement incomes," Mr Bowen said.
He has also indicated the Government's intention to change taxes on super that skew rewards to high-income earners.
The issue, as welfare groups and some economists have pointed out, is that the 15 per cent tax rate on super contributions delivers most benefit to high-income earners who would otherwise pay 45 per cent tax.
Mr Bowen said it was important to help boost the savings of lower-paid workers to reduce their call on the age pension.
"It is often the low- and middle-income earners who get overlooked in these kinds of debates," Mr Bowen told a SuperRatings conference in Melbourne.
"Tax concessions for low- and middle-income earners to save through super are less than those for high-income earners.
The fact that the top 5 per cent of contributors make around a quarter of all concessional contributions to superannuation, while 1.2 million people do not receive an income tax benefit on their concessional contributions, is a compelling one," he said.
Ben Spies-Butcher, a fellow at the Centre of Policy Development, said the Government was moving in the right direction, to rely less on tax breaks to encourage people to save, which benefited the wealthy most.
First published by Smh.com.au on October 14 2009
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