The Greens have warned Australia’s $4tn superannuation system has become a taxpayer subsidised wealth accumulation scheme, signalling they’ll take a tough line in negotiations on Labor’s plans to hike taxes on accounts worth more than $3m.
Treasurer Jim Chalmers confirmed on Thursday he wanted the Senate to consider the government’s existing proposal todouble the earnings tax on superannuation balances above $3m– from 15% to 30%. The change affects only an estimated 80,000 people and still leaves in place highly favourable tax treatment for retirement savings.
The Greens want the $3m threshold lowered to $2m, and for indexation rules to be added to the proposal. Labor says its plan is the best and fairest approach.
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Chalmers acknowledged Labor did not have a majority in the Senate and would need to work with minor parties to pass its legislation after 1 July. But he said the government was committed to controversial aspects of the plan, including taxing unrealised gains, or so-called paper profits – value increases on unsold assets.
“If someone’s got $3m in super, by one set of assumptions their superannuation tax concession before this change is a bit over $14,000, after this change a bit over $13,000, so still very generous tax concessions for people with big balances in super,” Chalmers said.
“It is important to remember that these changes were announced almost two-and-a-half years ago now. We did multiple rounds of consultation, and we said to people, ‘If there is a better, fairer way of making this calculation, tell us about it.’”
The Greens Treasury spokesperson, Nick McKim, said the minor party was offering to work constructively with Labor to ensure the plan to tax retirement accounts of some of the wealthiest Australians was “as strong and fair as it can be”.
The Greens will have the sole balance of power in the upper house when parliament returns on 22 July.“Over time, Australia’s superannuation system has become less about providing a dignified retirement for working people, and more of a vehicle for wealth accumulation. This needs to change,” McKim said.
“The Greens want to ensure that very wealthy Australians pay their fair share of tax, so that governments can do more to support people who need it.
“Obviously we have not yet seen the legislation or regulations that Dr Chalmers intends to introduce.”
McKim alsosaid the minor party had no intention of negotiating through the media.
Chalmers stressed politicians will not be exempt from the change, even if their retirement savings are defined benefit accounts. Separate regulation, allowing some payments to be deferred, includes provisions for interest to be charged until account holders reach retirement.
Chalmers called the special arrangements a “function of necessity”.
Defined benefit rules are based on a formula for retirement savings – usually using an individual’s salary level at retirement – rather than contributions made throughout their working life. Many politicians elected before 2014 are entitled to defined benefits, including Anthony Albanese, along with former bureaucrats and judges.
The Coalition had floateda possible deal with Labor to pass the plan, provided the unrealised gains provisions were dropped.
But Nationals senator Matt Canavanruled that out on Wednesday, warning farmers who own property through their superannuation funds would be badly affected.
“There’s no way in hell we’ll support attacks on people that don’t have the means to pay for it,” he told Nine.
“This so-called tax on unrealised gains is incredibly unfair. We should have a basic principle that we should only tax people where you’ve got some sort of income to be able to pay the tax man.”