This statement is contained in the recently released ACOSS report, Tax: Are we paying our fair share? The report examines the fairness, or otherwise, of the Australian taxation system. It points to the superannuation tax concessions as an element of unfairness in the tax system.
ACOSS says the superannuation tax concessions are “usually justified on the grounds that they assist people to achieve an adequate income in retirement, encourage saving, and reduce the cost of the age pension.”
Though, if this is the purpose of the tax concessions, “they should target people on low and middle incomes, who are less likely to save anyway or have adequate retirement incomes without government support (or compulsion), and more likely to rely on the Age Pension.”
Instead Treasury data shows that “rather than encourage retirement savings by those on average or low incomes, tax concessions disproportionately benefit the top 10% of taxpayers,” who receive 31.8% of superannuation tax concessions. Almost 50% of superannuation tax concessions go to the top 20% of taxpayers.
ACOSS finds that the personal income system is “relatively progressive,” with the bottom 20% of taxpayers paying an average of 3% of their income in tax, with the top 20% paying an average of 20%.
However “the progressive effect of the personal income tax is substantially offset by the GST and other indirect taxes.”
The report is the first in a series that ACOSS plans to release “addressing some of the key questions about the direction that tax reform should take.”
Want to be kept up-to-date with SMSF and Superannuation changes – why not subscribe to our Newsletter?
This article, as with all content on this site, is for informational purposes only, and is not legal, financial, tax or other advice. Please read our Terms and Conditions of Use.