A super waste of money: Redesigning super tax concessions
Super tax concessions are increasingly being used by high income earners as a way of minimising their tax. This is not their original purpose. They were designed to encourage people to save for their retirement so they would be more self-reliant and less dependent on taxpayers.
80 per cent of those who are of eligible age are on the age pension or part pension and this is predicted to still be the case in 2050. It would seem that super tax concessions are not working. Worse, almost $18 billion (60 per cent) of super tax concessions are going to the top 20 per cent of income earners. These are the people most likely to be a part of the 20 per cent not receiving an age pension. There is no economic justification for taxpayer’s money being spent on enlarging the super balances of those that are not likely to ever claim a pension. This means that about $18 billion is being wasted each year on unnecessary tax concessions.
Reform of super tax concessions is long overdue and should start from the principle that the only justification for using taxpayer’s money is if it reduces long term impacts on the budget.