Government urged to abolish superannuation tax breaks
THE Federal Government has been urged to abolish tax breaks on superannuation contributions, a policy expected to cost the government as much as $50 billion in three years' time.
A research paper from the Australia Institute urges the tax breaks, largely taken up by wealthier Australians, be ended to help give the wider population better pensions.
The paper cited Treasury figures showing the top two levels of income earners received almost 60% of the super tax breaks, while Australia's top income earners got 38% of the concessions in 2010-11.
Institute executive director and co-author Richard Denniss wrote those figures suggest up to 61% of a persons 'self-funded' retirement "is actually attributable to the tax concessions provided by other tax-payers".
He wrote that if the concessions were removed for co-contributions, it could help pay for a universal aged pension.
As the government moves to extend the aged pension to those aged over 70, likely from 2029 onwards, it is also considering the future of the aged pension.
Mr Denniss argued that the pension already costs $39 billion, while superannuation concessions cost about $35 billion this year, a cost projected to rise to $50.7 billion by 2016-17.
"With an ageing population the dual pension/superannuation system will become increasingly expensive," he wrote.
"The government's own projections are that the cost of super tax concessions as a share of GDP will exceed that of the age pension by 2016-17."
Instead, Mr Denniss proposed the single aged pension be raised from 30% of male total average weekly earnings to 37.5%, with similar increases in other aged pensions.
"This would raise the pension rate for singles from $21,018 per annum to $26,273 per annum and the pension rate for couples from $31,689 per annum to $39,611 per annum," he wrote.
"This system would cost $52 billion a year, almost 30 per cent less than we spend on both the pension and superannuation tax concessions."
The government has not yet confirmed its plans for the aged pension, pending the release of the federal budget in May.