The Australian Council of Social Service (ACOSS) has warned that every time politicians rule out tax and superannuation reforms in advance it makes future reform harder.
“We can no longer afford to avoid serious tax reform. If we postpone it until Governments really do face a Budget crisis the choices will be a lot tougher,” said ACOSS CEO Dr Cassandra Goldie.
“Every time the Government or other parties rule out changes in key areas like negative gearing or superannuation, the door closes further on genuine reform, but these problems won’t go away. Real reform requires a degree of vision, consensus and bi-partisanship, starting with our political leaders.”
The Tax White Paper process, of which the Tax Discussion Paper is the first stage, was meant to have everything on the table for discussion and debate. However the Government quickly rules out changes to superannuation in this term and the Prime Minister said there were not plans for changes in the future.
In a Tax Discussion Paper submission ACOSS says the retirement system has three components, the age pension, compulsory superannuation and superannuation tax concessions. “While the overall structure is sound, the third part, superannuation tax concessions, is the weak link in the chain, retaining a structure set at a time when superannuation was mainly a ‘perk’ for high income earners.”
“The tax treatment of superannuation lacks coherence: benefits are untaxed yet so are fund earnings in the ‘retirement phase’; fund earnings are not taxed consistently; and there are six different tax treatments for contributions.”
“Successive governments have tinkered with the system to deal with these problems but in the absence of structural reform, more changes are needed every few years, which erodes confidence in the system. This problem cannot be ‘solved’ by preserving the status quo, or more tinkering at the margins.”
ACOSS says future governments won’t be able to provide affordable healthcare, aged care or housing without tax reform.
“We need a fairer and simpler system of tax breaks for superannuation, and a decent Age Pension targeted to people who need it. What we have instead is a system that delivers over one third of superannuation tax breaks to the top 10% of taxpayers and a pension that extends to millionaires.”
“We agree with COTA, the superannuation industry, and business that these hard issues should be discussed in a thorough public review of retirement incomes policy in which no ‘sacred cows’ are spared.”
“Experience shows us that tax and budget reform can be achieved: but this will only happen if governments clearly define the problems, take the community into their confidence, engage stakeholders in a search for solutions, and crucially, listen to the diversity of community voices.”
“ACOSS is up for this and we ask all political parties, business, unions and the community sector, to work together in a spirit of good will to build consensus for reform,”said Dr Goldie.
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