Industry Super Australia (ISA) has renewed its call for a rebalancing of superannuation tax concessions and warned the Government against pursuing short-term Budget savings.
Delivering a supplementary submission to the Government’s Tax Review, the ISA urged measures specifically aimed at assisting both the young and lower income earners.
In doing so it, said the tax system needed to be recalibrated by “shifting billions in tax breaks from the top income earners to those on lower income rungs to help them achieve a better retirement and ease the call on the age pension”.
ISA chief executive, David Whiteley, said the current tax review process represented a golden opportunity to set the system up for the future but warned it shouldn’t be a quest for short term budget savings.
“There is the capacity to make the system worse unless changes are carefully thought through,” he said. “In particular it is vital that tax concessions are rebalanced rather than booked for short term budget savings and recent changes to the age pension asset test are tempered so incentives are coherent.”
Whiteley said the system had to deliver on community expectations of a better retirement — and if it did not, there would be inevitable pressure for the age pension to be lifted.
ISA’s proposals contained in its supplementary submission to the tax review include:
- a 25 per cent rebate for all income earners on contributions (capped at an appropriate level) and limiting total contributions to $50,000 a year, rather than $230,000 currently;
- A targeted Superseed contribution paid into the accounts for younger workers, particularly women to maximize compound interest;
- a fairer Age Pension asset test with a taper of no more than $2 per $1000 of assets; and
- level earnings taxes of 15 per cent in accumulation and the retirement phase with a rebate for earnings under $50,000 per annum in retirement.
