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The Guardian
6 days ago
- Business
- The Guardian
The super tax debate is divorced from reality – and more proof that Australia's tax system is built for the rich
The unhinged criticisms to changes in superannuation make more sense when you realise that Australia's entire tax debate is geared to ensure rich, wealthy people and companies get richer and wealthier. The government's proposal to reduce the tax concessions on earnings on super balances above $3m has been the ultimate case in point. It will affect only 0.5% of people with super and would take many decades of governments not increasing the threshold to affect anything close to even 10% of people, and yet you would think the government is about to seize the means of production. So divorced from reality is some of the commentary that the Australian Financial Review thought presenting a scenario where someone's super grew $1.18m in one year to $3.18m was a winning argument against the tax because that person would be required to pay (gasp!) $1,528 in tax. The new argument is that the tax is bad because people will just find other tax rorts to make use of. (Great, let's go after those as well!) Because avoiding paying tax is pretty much the point of the system for wealthy individuals and large companies. For example, right now, numerous commentators who are against the changes to super are also saying we need to cut company tax to ensure competitiveness. Less mention is made that many large companies pay little or no tax, including in some of the most profitable sectors in Australia. My colleagues at the Australia Institute found that from 2014-15 to 2022-23 Queensland LNG projects delivered $310.1bn total income for gas companies but they paid just $966m in company tax – or just 0.3% of total income (and all of that was paid by just one company). If the graph does not display click here When huge multinational companies are able to earn such huge incomes but pay bugger all tax, the problem that needs to be addressed is not that our 30% company tax rate is rendering Australia 'uncompetitive'. Yes, we need to reform our tax system. But suggest gas companies should pay more tax and the chin-scratchers will say 'hmmm not like that, something, something Hawke, Keating … bipartisanship! That's because most commentary about our economy values profits as sacrosanct and more important than wages: If the graph does not display click here The same applies to individuals – wealthy ones matter more, especially when it comes to superannuation. We're told the real evil is taxing 'unrealised capital gains'. These are the increases in the value of the assets held in your super that you have yet to sell (or 'realise'). And look, I can understand how bad it would be. Imagine if, for example, Centrelink had a record of every share you owned and every six months calculated their value, or if you had to let Centerlink know if the value of your non-financial assets went up by more than $1,000. Outrageous! Unprecedented! Communism! Oh wait, sorry, actually that's what people on the age pension already have to do. We have a system where it is considered right that the poorest people in Australia are penalised if their assets go above $314,000 but where parts of the media come out against a proposal that if someone's super goes up $314,000 in a year from $3m they should pay $4,462 (1.4%) in tax. Please. The only reason there is so much outrage over this is if the rich and vested interested are annoyed people might realise just how big of a rort they have going. Currently these massive unrealised capital gains in super can keep going up and people pay no tax on them (unrealised, you see!) and then when they are retired they can sell them (ie realise them), and then pay … errr zero tax. Under these changes they would have to pay 15% on the share of earnings above $3m. Yeah, end of times. Heck even normal capital gains outside of super gets a great deal. If you have held an asset for over a year you will get a 50% tax discount on the profit. Earn $250,000 in capital gains, you get $125,000 tax free. Earn $250,000 in income, you get $18,200 tax free. Little wonder the rich love capital gains. The 0.2% of taxpayers who make $1m each year account for 41% of all capital gains: If the graph does not display click here The average salary of people with an income of $1m or more is around 16 times the average of people earning less than $100,000; the average capital gains is 234 times larger: If the graph does not display click here The very rich, their media supporters and financial advisers are worried we might start wondering how much revenue is being lost each year from giving them these tax breaks. Well, we know the answer – in 2025-26 around $33bn in tax breaks for capital gains tax and superannuation go to the richest 10% – or around two-and-a-half times what it would cost to fund dental in Medicare: If the graph does not display click here So here we are – tax reforms meaning companies that pay bugger all tax demanding cuts in the company tax rates, and the richest 0.5% demanding they not get a slightly lower tax break on the super earnings. Don't be fooled into thinking they are caring about you. Instead think of what could be done if Australia's tax system was better designed – better schools, better hospitals, better infrastructure. Right now, Australia's tax system works to give the wealthiest in society the smoothest of rides. These super changes will force them to go over a very small speed bump. They should be supported and they also should be just the start. Greg Jericho is a Guardian columnist and policy director at the Centre for Future Work
SBS Australia
25-05-2025
- Business
- SBS Australia
Morning News Bulletin 26 May 2025
TRANSCRIPT About 32,000 residents on the Mid North Coast remain isolated as floodwaters recede Some economists say a proposed super tax bill may create unfair outcomes Lando Norris wins the Monaco Grand Prix About 32,000 people remain isolated by floodwaters along the New South Wales coast, as meteorologists warn of more challenging weather conditions ahead. Recovery efforts are underway in flood-affected communities, with the damage expected to take weeks to clean up. But rain and strong winds are expected to hamper efforts with a risk of landslides and toppling trees in coming days. Senior Meteorologist Gabrielle Woodhouse says the Bureau will likely expand the areas covered by its severe weather warning. "What we're going to see going into the next couple of days is a very strong cold front move across New South Wales and that's going to bring very windy conditions to most areas. So, what we're expecting is the severe weather warning that is current for the Alpine area of New South Wales - that warning area is going to expand to include parts of south-west New South Wales as well as parts of the Snowy Mountains and the ACT for winds increasing on Monday." Some economists say a proposed bill imposing a 15 per cent tax on super balances over $3 million has the right intentions, but may create unfair outcomes. The Australia Institute says the bill would affect around one in every 200 savers, but some fear it may force Australians to move assets out of their super. Independent economist Saul Eslake says super has become a vehicle for the rich to avoid tax, but questions why it's being imposed on super rather than on housing. He says it may encourage wealthy people to put more into owner-occupied housing, which is exempt from tax. Speaking to Sky News, Liberal Senator Andrew Bragg says while the system can be improved, this is the wrong way. "But ultimately the people who love the superannuation system which are the financial institutions and the union should look very carefully at this. Because, ultimately, if Chalmers is successful in passing the bill as it's currently drafted it will destroy superannuation as the preferred savings vehicle in Australia. Particularly for millennials and Gen Z." Treasurer Jim Chalmers says no one has proposed a better way of making this calculation, after almost three years of consultation. A major shopping centre in Melbourne's north went into lockdown on Sunday afternoon when a fight broke out between around 10 people, some armed with knives. Two people have been arrested, including a 15-year-old, and one person was taken to hospital with serious injuries after a fight broke out in the food court of Northland Shopping Centre in Preston. Victoria Police say the meeting was pre-planned between the groups, assuring the public that this was not a random attack. Superintendent Kelly Lawson says police are still searching for all those involved. "There have been others identified and police are working through identifying the remaining gangs, as you know, Victoria Police has a focus through Operation Alliance in relation to our gangs, and we will know who these people are and it will not take very long to go and arrest them." Coercive control is now a criminal offence in Queensland, with new laws coming into effect from today. Convicted offenders will face up to 14 years in jail. Called Hannah's Law, it's named after Hannah Clarke, who was murdered alongside her three children by her estranged partner. Coercive control involves patterns of behaviours which include emotional, psychological and economic abuse, along with isolation, intimidation, sexual coercion and cyberstalking. A Gaza doctor who lost nine of his children in an Israeli air strike remains in intensive care. Hamdi Al-Najjar was at home in Khan Younis with his 10 children when the strike hit. At Nasser Hospital surgeon Dr Abdul Aziz Al-Farra says the doctor has multiple injuries. "A critical condition that required two surgeries on his abdomen and chest to stop the bleeding. Multiple injuries on his body, head and foot. He is now receiving intensive care. His special situation is that his wife, who is also a doctor, also received her nine children, martyrs, from the bombing. May God heal him and help him and help all the medical teams to help him." According to medical officials in Gaza, the nine children were aged between one and 12 years old. The child that survived, a boy, is in a serious but stable condition. Najjar's wife, Alaa, also a doctor, was not at home at the time of the strike. She was treating Palestinians injured in Israel's more than 20-month war in Gaza against Hamas in the same hospital where her husband and son are receiving care. Israel confirmed the air strike, saying it targeted militants and is reviewing reports of civilian deaths. In sports, Lando Norris has celebrated his first Monaco Grand Prix win from pole position. He has also slashed McLaren teammate Oscar Piastri's Formula One lead to three points - in a race more about strategy than speed. Ferrari's Charles Leclerc finished runner-up in the home race he won last year, with Piastri third and Red Bull's Max Verstappen fourth. All four finished in the order they started. Piastri says he is taking away the positives. "I knew after qualifying that this was probably going to be where we end up. So that's all I can ask for really. Some definite lessons to take for when I come back here next year. All in all, still not a terrible weekend in terms of points - and big on the podium. And Monaco is always pretty special, so I will take it." The win is the Briton's second in eight races and first since the Australian season-opener in March, as well as McLaren's first at Monaco since 2008.
The Advertiser
25-05-2025
- Business
- The Advertiser
Fears super tax rise for rich will whack housing market
A bid to increase taxes on wealthy Australians' superannuation has been paved with good intentions, but there are warnings it may create unfair outcomes. The federal government is hoping to pass a bill to impose a 15 per cent tax on super balances higher than $3 million, which would affect about one in every 200 savers, according to the Australia Institute. Some have complained it would force Australians to move their assets, such as small businesses and farms, out of their super. Independent economist Saul Eslake does not have much sympathy for them. "That's not what bloody super is for," Mr Eslake told AAP. "Super has become a vehicle for rich people to avoid tax and it's become a subsidy for bequests, not retirement income. "I support the government's objective ... however, I think the government is going about it the wrong way." The bill would tax unrealised gains, which is the growth in the value of an investment before it is sold. Mr Eslake branded it "unfair", as it means people would be taxed even if they had not earned income. Treasurer Jim Chalmers insists calculating unrealised gains is not unique and says no one has proposed a better way of making this calculation after almost three years of consultation. Some have called the proposal a tax on wealth. Mr Eslake is not opposed to this, but questions why it is being imposed on superannuation and not on housing. "This will encourage people - particularly rich people - to put more money into owner-occupied housing, which is completely exempt from tax," he said. "It's enough of a tax shelter as it is." The government's decision not to index the $3 million threshold has also been a sore spot for critics. While the proposal may only affect 0.5 per cent of Australian savers, the lack of indexation means many more could be taxed in the coming years. Dr Chalmers anticipates the government could raise the threshold in the future. The superannuation tax was first proposed in 2023 and could be one of Labor's first bills to pass after its landslide election win. "Just because they've got a mandate, doesn't mean it's right," Mr Eslake said. The economist has suggested that anyone with more than a certain amount - say $3 million - in their super should not get any concessions on future contributions and would have to pay the marginal tax rate on contributions and income generated. Alternatively, super contributions and earnings could be taxed at a person's marginal rate minus 15 percentage points rather than a flat 15 per cent, meaning those in the top tax rate would pay 30 per cent, Mr Eslake proposed. Liberal senator Andrew Bragg acknowledged steps to improve the tax system were worth consideration, but warned Labor's bill would "destroy superannuation as the preferred savings vehicle in Australia, particularly for millennials and Gen Zs". A bid to increase taxes on wealthy Australians' superannuation has been paved with good intentions, but there are warnings it may create unfair outcomes. The federal government is hoping to pass a bill to impose a 15 per cent tax on super balances higher than $3 million, which would affect about one in every 200 savers, according to the Australia Institute. Some have complained it would force Australians to move their assets, such as small businesses and farms, out of their super. Independent economist Saul Eslake does not have much sympathy for them. "That's not what bloody super is for," Mr Eslake told AAP. "Super has become a vehicle for rich people to avoid tax and it's become a subsidy for bequests, not retirement income. "I support the government's objective ... however, I think the government is going about it the wrong way." The bill would tax unrealised gains, which is the growth in the value of an investment before it is sold. Mr Eslake branded it "unfair", as it means people would be taxed even if they had not earned income. Treasurer Jim Chalmers insists calculating unrealised gains is not unique and says no one has proposed a better way of making this calculation after almost three years of consultation. Some have called the proposal a tax on wealth. Mr Eslake is not opposed to this, but questions why it is being imposed on superannuation and not on housing. "This will encourage people - particularly rich people - to put more money into owner-occupied housing, which is completely exempt from tax," he said. "It's enough of a tax shelter as it is." The government's decision not to index the $3 million threshold has also been a sore spot for critics. While the proposal may only affect 0.5 per cent of Australian savers, the lack of indexation means many more could be taxed in the coming years. Dr Chalmers anticipates the government could raise the threshold in the future. The superannuation tax was first proposed in 2023 and could be one of Labor's first bills to pass after its landslide election win. "Just because they've got a mandate, doesn't mean it's right," Mr Eslake said. The economist has suggested that anyone with more than a certain amount - say $3 million - in their super should not get any concessions on future contributions and would have to pay the marginal tax rate on contributions and income generated. Alternatively, super contributions and earnings could be taxed at a person's marginal rate minus 15 percentage points rather than a flat 15 per cent, meaning those in the top tax rate would pay 30 per cent, Mr Eslake proposed. Liberal senator Andrew Bragg acknowledged steps to improve the tax system were worth consideration, but warned Labor's bill would "destroy superannuation as the preferred savings vehicle in Australia, particularly for millennials and Gen Zs". A bid to increase taxes on wealthy Australians' superannuation has been paved with good intentions, but there are warnings it may create unfair outcomes. The federal government is hoping to pass a bill to impose a 15 per cent tax on super balances higher than $3 million, which would affect about one in every 200 savers, according to the Australia Institute. Some have complained it would force Australians to move their assets, such as small businesses and farms, out of their super. Independent economist Saul Eslake does not have much sympathy for them. "That's not what bloody super is for," Mr Eslake told AAP. "Super has become a vehicle for rich people to avoid tax and it's become a subsidy for bequests, not retirement income. "I support the government's objective ... however, I think the government is going about it the wrong way." The bill would tax unrealised gains, which is the growth in the value of an investment before it is sold. Mr Eslake branded it "unfair", as it means people would be taxed even if they had not earned income. Treasurer Jim Chalmers insists calculating unrealised gains is not unique and says no one has proposed a better way of making this calculation after almost three years of consultation. Some have called the proposal a tax on wealth. Mr Eslake is not opposed to this, but questions why it is being imposed on superannuation and not on housing. "This will encourage people - particularly rich people - to put more money into owner-occupied housing, which is completely exempt from tax," he said. "It's enough of a tax shelter as it is." The government's decision not to index the $3 million threshold has also been a sore spot for critics. While the proposal may only affect 0.5 per cent of Australian savers, the lack of indexation means many more could be taxed in the coming years. Dr Chalmers anticipates the government could raise the threshold in the future. The superannuation tax was first proposed in 2023 and could be one of Labor's first bills to pass after its landslide election win. "Just because they've got a mandate, doesn't mean it's right," Mr Eslake said. The economist has suggested that anyone with more than a certain amount - say $3 million - in their super should not get any concessions on future contributions and would have to pay the marginal tax rate on contributions and income generated. Alternatively, super contributions and earnings could be taxed at a person's marginal rate minus 15 percentage points rather than a flat 15 per cent, meaning those in the top tax rate would pay 30 per cent, Mr Eslake proposed. Liberal senator Andrew Bragg acknowledged steps to improve the tax system were worth consideration, but warned Labor's bill would "destroy superannuation as the preferred savings vehicle in Australia, particularly for millennials and Gen Zs". A bid to increase taxes on wealthy Australians' superannuation has been paved with good intentions, but there are warnings it may create unfair outcomes. The federal government is hoping to pass a bill to impose a 15 per cent tax on super balances higher than $3 million, which would affect about one in every 200 savers, according to the Australia Institute. Some have complained it would force Australians to move their assets, such as small businesses and farms, out of their super. Independent economist Saul Eslake does not have much sympathy for them. "That's not what bloody super is for," Mr Eslake told AAP. "Super has become a vehicle for rich people to avoid tax and it's become a subsidy for bequests, not retirement income. "I support the government's objective ... however, I think the government is going about it the wrong way." The bill would tax unrealised gains, which is the growth in the value of an investment before it is sold. Mr Eslake branded it "unfair", as it means people would be taxed even if they had not earned income. Treasurer Jim Chalmers insists calculating unrealised gains is not unique and says no one has proposed a better way of making this calculation after almost three years of consultation. Some have called the proposal a tax on wealth. Mr Eslake is not opposed to this, but questions why it is being imposed on superannuation and not on housing. "This will encourage people - particularly rich people - to put more money into owner-occupied housing, which is completely exempt from tax," he said. "It's enough of a tax shelter as it is." The government's decision not to index the $3 million threshold has also been a sore spot for critics. While the proposal may only affect 0.5 per cent of Australian savers, the lack of indexation means many more could be taxed in the coming years. Dr Chalmers anticipates the government could raise the threshold in the future. The superannuation tax was first proposed in 2023 and could be one of Labor's first bills to pass after its landslide election win. "Just because they've got a mandate, doesn't mean it's right," Mr Eslake said. The economist has suggested that anyone with more than a certain amount - say $3 million - in their super should not get any concessions on future contributions and would have to pay the marginal tax rate on contributions and income generated. Alternatively, super contributions and earnings could be taxed at a person's marginal rate minus 15 percentage points rather than a flat 15 per cent, meaning those in the top tax rate would pay 30 per cent, Mr Eslake proposed. Liberal senator Andrew Bragg acknowledged steps to improve the tax system were worth consideration, but warned Labor's bill would "destroy superannuation as the preferred savings vehicle in Australia, particularly for millennials and Gen Zs".
Perth Now
25-05-2025
- Business
- Perth Now
Fears super tax rise for rich will whack housing market
A bid to increase taxes on wealthy Australians' superannuation has been paved with good intentions, but there are warnings it may create unfair outcomes. The federal government is hoping to pass a bill to impose a 15 per cent tax on super balances higher than $3 million, which would affect about one in every 200 savers, according to the Australia Institute. Some have complained it would force Australians to move their assets, such as small businesses and farms, out of their super. Independent economist Saul Eslake does not have much sympathy for them. "That's not what bloody super is for," Mr Eslake told AAP. "Super has become a vehicle for rich people to avoid tax and it's become a subsidy for bequests, not retirement income. "I support the government's objective ... however, I think the government is going about it the wrong way." The bill would tax unrealised gains, which is the growth in the value of an investment before it is sold. Mr Eslake branded it "unfair", as it means people would be taxed even if they had not earned income. Treasurer Jim Chalmers insists calculating unrealised gains is not unique and says no one has proposed a better way of making this calculation after almost three years of consultation. Some have called the proposal a tax on wealth. Mr Eslake is not opposed to this, but questions why it is being imposed on superannuation and not on housing. "This will encourage people - particularly rich people - to put more money into owner-occupied housing, which is completely exempt from tax," he said. "It's enough of a tax shelter as it is." The government's decision not to index the $3 million threshold has also been a sore spot for critics. While the proposal may only affect 0.5 per cent of Australian savers, the lack of indexation means many more could be taxed in the coming years. Dr Chalmers anticipates the government could raise the threshold in the future. The superannuation tax was first proposed in 2023 and could be one of Labor's first bills to pass after its landslide election win. "Just because they've got a mandate, doesn't mean it's right," Mr Eslake said. The economist has suggested that anyone with more than a certain amount - say $3 million - in their super should not get any concessions on future contributions and would have to pay the marginal tax rate on contributions and income generated. Alternatively, super contributions and earnings could be taxed at a person's marginal rate minus 15 percentage points rather than a flat 15 per cent, meaning those in the top tax rate would pay 30 per cent, Mr Eslake proposed. Liberal senator Andrew Bragg acknowledged steps to improve the tax system were worth consideration, but warned Labor's bill would "destroy superannuation as the preferred savings vehicle in Australia, particularly for millennials and Gen Zs".
West Australian
25-05-2025
- Business
- West Australian
Fears super tax rise for rich will whack housing market
A bid to increase taxes on wealthy Australians' superannuation has been paved with good intentions, but there are warnings it may create unfair outcomes. The federal government is hoping to pass a bill to impose a 15 per cent tax on super balances higher than $3 million, which would affect about one in every 200 savers, according to the Australia Institute. Some have complained it would force Australians to move their assets, such as small businesses and farms, out of their super. Independent economist Saul Eslake does not have much sympathy for them. "That's not what bloody super is for," Mr Eslake told AAP. "Super has become a vehicle for rich people to avoid tax and it's become a subsidy for bequests, not retirement income. "I support the government's objective ... however, I think the government is going about it the wrong way." The bill would tax unrealised gains, which is the growth in the value of an investment before it is sold. Mr Eslake branded it "unfair", as it means people would be taxed even if they had not earned income. Treasurer Jim Chalmers insists calculating unrealised gains is not unique and says no one has proposed a better way of making this calculation after almost three years of consultation. Some have called the proposal a tax on wealth. Mr Eslake is not opposed to this, but questions why it is being imposed on superannuation and not on housing. "This will encourage people - particularly rich people - to put more money into owner-occupied housing, which is completely exempt from tax," he said. "It's enough of a tax shelter as it is." The government's decision not to index the $3 million threshold has also been a sore spot for critics. While the proposal may only affect 0.5 per cent of Australian savers, the lack of indexation means many more could be taxed in the coming years. Dr Chalmers anticipates the government could raise the threshold in the future. The superannuation tax was first proposed in 2023 and could be one of Labor's first bills to pass after its landslide election win. "Just because they've got a mandate, doesn't mean it's right," Mr Eslake said. The economist has suggested that anyone with more than a certain amount - say $3 million - in their super should not get any concessions on future contributions and would have to pay the marginal tax rate on contributions and income generated. Alternatively, super contributions and earnings could be taxed at a person's marginal rate minus 15 percentage points rather than a flat 15 per cent, meaning those in the top tax rate would pay 30 per cent, Mr Eslake proposed. Liberal senator Andrew Bragg acknowledged steps to improve the tax system were worth consideration, but warned Labor's bill would "destroy superannuation as the preferred savings vehicle in Australia, particularly for millennials and Gen Zs".
