The Federal Government has been warned that the cost of its concessional tax treatment of superannuation is likely to blow out significantly from $13.4 billion in the current financial year to $25.8 billion in 2017-18.
The warning has come from the Australia Institute based on the Federal Treasury's latest Tax Expenditure Statement with the Institute's executive director, Dr Richard Denniss, claiming the data had revealed superannuation and housing tax breaks for the wealthy were costing the budget ten times as much as leaving the GST off fresh food.
Further, he said the Treasury statement had also shown that the cost of one form of tax concession for superannuation was set to double.
"The Abbott government says it will do anything to repair the budget bottom line, but their definition of anything does not extend to closing the loopholes which are draining tens of billions of dollars from the budget each year," he said.
Denniss pointed to the Tax Expenditure Statement which he said had shown the cost of the concessional tax treatment of superannuation fund earnings would "blow out from $13.4 billion in 2014-15 to $25.8 billion 2017-18".
"The total cost of all of the different tax concessions for superannuation is forecast to hit $45 billion by 2017," he said.
As well, he said the Treasury had also forecast that the cost of the Howard government decision to tax income from capital gains at half the rate of other forms of income "will surge from $5.8 billion to $7.6 billion over the same period".
"The major cause of the Commonwealth budget deficit is the rapid reduction in the amount of revenue that is being collected. According to the OECD, the IMF, the World Bank and our own Commonwealth Treasury, the level of tax being collected in Australia is not just low by international standards, it is low by historical standards," Denniss said.
"If Joe Hockey was serious about getting the budget back into surplus he would be cracking down on the loopholes and roots that allow multi- millionaires and some big foreign companies to pay zero tax in Australia. But instead he seems determined to crack down on the sick and the disabled," he said.
