Labor's super tax forecast to hit average 22-year-olds as government clears path for legislation after election victory
The Albanese government's super tax has been branded 'shameless economic theft' after modelling revealed it will impact the average 22-year-old by the time they retire.
The Labor Party promised no changes to superannuation at the 2022 election but has since reneged and attempted to pass legislation doubling tax on big super balances.
The proposal to impose a 30 per cent tax on funds above $3 million now faces no barriers as Labor has been projected to secure a significant majority in the lower house, while only needing the Greens to pass legislation in the Senate.
Proposed legislation will also introduce a tax on unrealised capital gains above the same threshold.
While the government insists the change affects only the top 0.5 per cent of accounts, modelling from AMP Deputy Chief Economist Diana Mousina suggests otherwise.
'An average 22-year-old today, who's earning average full-time earnings, will hit the cap when they get to about 62 years old on my analysis,' Ms Mousina told Sky News.
'So that's before they actually reach retirement.'
She warned the government's failure to index the $3 million cap means growing numbers of Australians will eventually be drawn into the tax net.
'My estimates were actually, I think, understating the amount of people that will hit the cap because I used quite low return assumptions,' Ms Mousina said.
She also flagged broader economic distortions that may result from the policy as people try to find a way around the taxes.
'If people know that their super is going to be hit, then inheritances will go elsewhere,' she said.
'More people will probably go to purchase a home, which has implications for home prices in the future.
'So people will find a way around this system to try and reduce their taxable income as much as possible.'
As the Albanese government prepares to forge ahead with passing the legislation, Liberal Senator Andrew Bragg told Sky News it was 'economic theft'.
'The government says this new tax will only apply to 0.5 per cent of individuals with a superannuation account, but importantly, Labor has not indexed it,' he said.
'80,000 Australians will have a new tax on their retirement introduced immediately, but as younger Australians earn more, there is no doubt they will be caught up in this shameless act of economic theft.
'In time, it will hit at least 2 million more Australians. But that's been (Treasurer) Jim Chalmers' plan all along.'
Prime Minister Anthony Albanese has refused to back down amid mounting pressure to amend the policy—to exclude unrealised gains and include indexation.
'We have our policy. We've had legislation. It's been before the parliament,' he said before the election, when the policy was held up in the upper house.
"It will affect - importantly - 0.5 per cent of the superannuation population. That's all. And it won't mean they don't get concessions.
'It will just mean the concession isn't as large. That's our policy.'
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