Jim Chalmers doubles down on super tax credit ratings
Treasurer Jim Chalmers says the federal government risks further strain on the budget without rethinking Australia’s pension system.
Labor has come under fire from the opposition for announcing it was reviewing current pension tax breaks after saying in the run-up to the election it would not make any changes to the system.
Dr. Chalmers said the government had not changed its position, but rather recognized that the concessions were “costly”, that the budget needed to be balanced and that now was the right time for a “national conversation”.
“As part of what I admitted earlier this week, these concessions in the pension system are not cheap,” he told ABC Radio.
“I don’t think it’s particularly controversial to admit that, and if you believe in retirement and its ability to provide people with a dignified retirement, then you need to make sure that these kinds of tax breaks are sustainable and affordable going forward. ”
Super tax breaks were first introduced as a way to encourage employees to super save instead of relying on retirement. The allowances now cost the budget more than the retirement pension each year.
When asked several times whether there would be any change to the super-tax breaks in May’s budget, Dr Chalmers finally admitted that the government had not yet made a decision.
“If you believe in super and there is an important role for these tax breaks, you have to make sure you can afford them against all other budgetary pressures,” he said.
Dr Chalmers sparked debate on pensions earlier this week after beginning a consultation period to achieve a defined goal of super, namely that it “maintain savings and generate income for a dignified retirement, alongside government support, in an equitable and sustainable way.” way”.
Part of what the government wants to look at is the tax breaks available to the wealthiest Australians.
About two-thirds of the $50 billion in annual concessions go to the top 20 percent of income earners.
One idea being floated is to eliminate tax breaks for super balances over $3 million, while another proposal is to lower the cap on concessional super contributions.
Dr. Chalmers said the average super balance was about $150,000 and less than 1 percent of people in the system had balances over $3 million.
“The average among that group is $5.8 million and they have access to a slew of tax breaks… the point we want to make is we need to figure out where we are getting the most bang for our buck when it comes to some of these concessions ‘, he said.
Financial Services Secretary Stephen Jones said the government was looking at what was a “reasonable amount” for retirement income.
“It’s not about the government telling people they can’t save more than $5 million, $10 million, $100 million for retirement. We are saying what is a reasonable contribution that the Australian taxpayer should be making through the budget to help people save for retirement income,” he told ABC News.
“The average pension balance, the average pension fund balance at retirement is about $150,000. That’s a long, long way from $100 million.
“If we all agree that the purpose of pensions is to provide retirement income in retirement, then it is unbelievable that you could have $100 million in a retirement account giving you very generous tax breaks that being unavailable outside the system… it’s clearly not about retirement income. It’s about tax management, estate planning – not retirement income. That’s an obvious place to look.”
Shadow treasurer Angus Taylor on Tuesday criticized the government for going back on its promise not to “play super”, but said any change would have to be made carefully.
“Any change in super should be treated with great caution,” he said.
“People need to trust the system and change threatens to undermine the competence Australians have in the system.”
Mr Taylor said the opposition would wait to see “what Labor comes up with”