After admitting in May that superannuation reform was inevitable in the interests of budget sustainability, Treasurer Joe Hockey has once again ruled-out ever changing superannuation tax settings. From Money Management:
Addressing a PWC Tax Reform Forum, Hockey said that not only was the Government going to stick to its promise not to “engage in adverse or unexpected changes to superannuation in our first term of government” but also stated “we have no plans to increase superannuation taxes into the future”.
“During a period of low global interest rates, which can have a significant impact on superannuation balances — plus the volatility in the world economy — why would a government want to increase taxes on super?”…
“Stability in tax policy is important, and even more important where individuals rely on the long term stability of the rules around retirement savings,” he said. “What self-funded retirees and part pensioners need now, more than ever ,is stability not more tinkering with the system.”
“Superannuation is not the government’s money; it is the money that belongs to the Australian people — and the Australian people deserve better than to have governments continually mucking around with the rules or treating their savings as a piggy bank,” Hockey said.
Funny how such concerns did not bother Joe Hockey when the Government passed legislation last year increasing the tax on superannuation paid by low income workers.
That’s right, the abolition of the Low Income Superannuation Contribution (LISC) means that low-income earners now pay more tax on their compulsory super contributions than they do on their ordinary wages.
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Adding to the hypocrisy, Bozo Joe has once again ruled-out reforming negative gearing, repeating the lie that it is primarily middle income earners that benefit from the tax break as well as repeating the myth that abolishing negative gearing would push up rents. From The Australian:
Mr Hockey said there was a lot of misinformation about negative gearing.
There was more than double the number of people earning less than $80,000 who owned a negatively geared property than those earning more, he said.
“This is a way for people on medium incomes or even lower incomes to be able to get into the property market,” Mr Hockey told 2UE radio on Thursday…
“So if you were to end negative gearing, you would actually see an increase … in rents … in a number of cities,” Mr Hockey said.
I have previously debunked the myths about middle income earners benefiting most from negative gearing and its impact on rents, which you can read here.
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Nevertheless, here’s what the RBA said on the former in its submission to the House of Representative’s Inquiry into Home Ownership:
Tax data also show that the incidence of property investment and the incidence of geared property investment… increase with income…
While the incidence of property investment increases with the level of income, the Household, Income and Labour Dynamics in Australia (HILDA) Survey also suggests that most investor households are in the top two income quintiles. These households hold nearly 80 per cent of all investor housing debt…
That’s right, the top 40% of income earners hold nearly 80% of all investor mortgage debt. Put that in your pipe and smoke it, Bozzo Joe.
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It appears that as far as the Abbott Government is concerned, “ending the age of entitlement” only applies when you are poor, with tax breaks favouring the rich off limits to reform.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
