Treasurer Jim Chalmers has announced Labor is backing down on the proposed tightening of the super tax for the very wealthy. What’s the scam?
The scam is how the Labor Government is letting hyperbole and hysteria stop even minor tax reform.
The original proposal was directed at people with more than $3m in self-managed superfunds – less than 0.5% of superannuants – making their funds pay tax on some capital gains, even when unrealised (assets appreciated, but not sold). When announced in February 2024, Treasury said the changes would “make the system fairer” and raise $2.5B in annual tax revenue.
An additional 15% (30% total) tax was hardly a measure that would make a significant impact on those affected, but it caused a massive ruckus. Outlandish claims were made, ranging from “productivity killer” to “obliterating investments in start-ups” and “farmers unable to pass on their farms to the next generation.”
The changes announced today mean the $3m threshold will now be indexed, and an additional threshold set at $10m with a 40% tax rate. The more significant change is unrealised gains will no longer be included in the tax calculation, meaning the tax revenue from the changes will be a lot less than originally stipulated. (One economist MWM spoke to suggested at least $800m less.)
The Australia Institute’s Chief Economist, Greg Jericho, told MWM, “These changes do little to rein in massive inequality of the superannuation tax system. The government’s decision today
will embolden those who prefer a tax system that favours the rich.
