Super taxes shape as poll battle
Superannuation looms as a classic Federal election battle, with Labor championing the poor and the conservatives likely to oppose any attempt to wind back benefits for the rich.
With the major parties after big savings - Labor for big reforms in disability and education, the coalition to offset carbon price revenue - tax concessions to encourage people to save for their retirement are in the gun.
While Prime Minister Julia Gillard this week affirmed her Government would not tax superannuation withdrawals for over-60s, Treasury is considering options to pare back concessions to the rich.
The 15 per cent concessional tax on superannuation contributions and earnings will rise to $45 billion in foregone revenue by 2015-16, prompting concern this is unsustainable.
Government focus is on the top 5 per cent of earners - those on taxable incomes above $144,000 - who will get 20.3 per cent of total concessions, according to a Treasury analysis, worth $6.5 billion this financial year.
The top one per cent who earn more than $295,000 a year get 5.3 per cent of the concessions, worth $1.7 billion.
Among options for the Government is to increase the tax on super contributions for the rich and end big earners' access to the 15 per cent concessionary tax rate for voluntary contributions, which are already capped at $25,000 a year. Though Labor has not finalised its proposals, business groups and industry chiefs have pre-emptively criticised any tampering with the superannuation system.
But the coalition will face its own super-related backlash after Opposition Leader Tony Abbott confirmed he would reverse Labor's low-income superannuation contribution, under which the 15 per cent contribution tax for those earning $37,000 is refunded.
By reinstating the $1 billion tax, 3.6 million Australians would be up to $500 a year worse off, including 358,400 in WA.
The Opposition insists it is prudent to reverse Labor's measure because it was meant to be funded by the mining tax. But the coalition supports lifting the 9 per cent superannuation guarantee to 12 per cent, which is also linked to the mining tax.
Whatever the changes, Federal MPs, senior public servants and judges on pre-2004 defined benefit schemes will be unaffected.
