Sector lobbyist the SMSF Owners’ Alliance has refuted opposition treasury spokesman Chris Bowen’s claim in his budget response that the tax incentives on superannuation will equal the cost of the age pension in 2018/19.
Specifically, Labor stipulated the retirement savings tax incentives would reach $50 billion – a development that would justify imposing a new tax of 15 per cent on superannuation earnings over $75,000.
“The shadow treasurer’s media release of 20 May adds together $20 billion in estimated tax concessions on superannuation contributions and $30 billion in estimated concessions on superannuation fund earnings,” the SMSF Owners’ Alliance said.
“These numbers are from Treasury’s 2014 Taxation Expenditure Statement (TES) included in the budget papers.
“However, it can’t be claimed, simply by adding the two components, that the total cost to the budget will be $50 billion and this is potentially the saving that could be made if superannuation tax concessions are removed.”
According to the lobby group, the two figures measured different things and therefore should not be added together.
Further, the group said no allowances had been made in the calculation for the resulting decrease in superannuation contributions if some of the tax concessions were removed.
“If superannuation tax concessions are withdrawn, people will find other tax-effective ways of investing. The most obvious of these is the family home, which is not taxed,” it said.
“Making investment in superannuation less attractive is likely to add to the pressure on house prices.”
The group also pointed out the estimated costs of retirement income tax concessions could not be examined in isolation, meaning the flow-on effects on real pension costs also had to be taken into account.
“Less money would flow into superannuation and this would lead to greater demand for the age pension,” it said.
