Greens’ super plan would save $11 billion while boosting retirement income of low earners
Greens’ Treasury spokesperson Adam Bandt today announced that the Greens would save $11bn over the next four years by reining in unfair and unsustainable superannuation tax concessions, while supporting low income earners to save for their retirement.
“Unfair tax breaks for superannuation are becoming unsustainable and fair reform is needed,” said Mr Bandt.
“People deserve a tax break when they contribute to their superannuation, but by making the tax breaks less generous for higher income earners we can save $11bn to fund schools and hospitals.”
“The Greens would make the superannuation tax system more progressive by more closely aligning it with the income tax system.”
The Greens proposal is for progressive tax rates on superannuation contributions in accordance with the below table, with a government co-contribution for individuals below the tax-free threshold ($18,200) of 15 cents for each dollar of concessional superannuation contributions.
Under the Greens’ proposal, someone earning $18,000 (under the tax-free threshold) whose employer is contributing the legal minimum in super contributions would no longer pay any tax on their concessional superannuation contributions and would receive a government co-contribution of about $257, leaving them better off than under the current system.
The Parliamentary Budget Office has advised that this would improve the fiscal balance by $10,890m over the forward estimates.
|
Taxable income |
Current marginal tax rate |
Current tax rate on super contributions (per $) |
Greens’ proposed new tax rate on super contributions (per $) |
|
$0-18,200 |
0c |
15c* |
0c |
|
$18,200 – $37,000 |
19c |
15c* |
0c |
|
$37,001 – $100,000 |
32.5c (37c from $80k) |
15c |
15c |
|
$100,001 – $150,000 |
37c |
15c |
22c |
|
$150,001 – $180,000 |
37c |
15c |
32c |
|
$180,001 onwards |
45c (47c w deficit levy) |
15c** |
32c |
*This is currently given back to people on low incomes through the Low Income Super Contribution, which was scheduled to end after the 2016/17 Financial Year. In the 2016 Budget, the government has decided to introduce a similar measure called the Low Income Superannuation Tax Offset
**The rate is currently 30c per people with combined incomes and superannuation contributions of over $300,000, with proposals to reduce this to $250,000.
Media contact: Adam Pulford, 0429 109 054