The Financial Services Council (FSC) is calling for both industry and retail superannuation funds to come together to design a package of superannuation tax reforms so that the sector can be protected from vested interests seeking to use it as a revenue honey pot.
The call has been made in a column by FSC senior policy manager, Blake Briggs, to be published in the next edition of Money Management’s sister publication, Super Review, and follows on from similar sentiment expressed by FSC chief executive, Sally Loane, in the context of the Tax White Paper.
Briggs has written that the FSC his not shying away from the debate and that the organisation has taken a first step by “agreeing that, in the context of a holistic review of the tax regime, the tax treatment of superannuation is on the table”
He said the superannuation industry would be well served to use the Tax White Paper process to ground the debate using a solid, evidentiary basis that supports a policy position with integrity.
“The current super tax debate is misleading, relying on the annual Tax Expenditures Statement (TES) to put a cost on current tax concessions. The TES is conceptually flawed as a starting point, with even Treasury agreeing the TES is not the basis for determining the ‘cost’ of the system,” Briggs said.
He pointed to reports by Mercer, the FSC and others which had demonstrated that the TES failed to consider behavioural changes that would result from removal of the tax benefits afforded super, noting that the TES also ignored downstream savings on age pension as a result of superannuation savings, which NATSEM estimated will be worth $11.1 billion a year by 2030.
“Flat taxation of contributions and earnings makes it easy for opponents to claim the ballooning ‘concession’, rising to $45 billion by 2017-18, are unsustainable. Unfortunately this number will continue to grow exponentially as funds under management continue to rise.”
“The Tax White Paper process presents an opportunity to the industry to reshape public opinion and advocate for tax reform that promotes the stability and sustainability of the superannuation system for generations,” Briggs said. “This requires all sections of the industry to agree on the objective of the system and how tax settings can be aligned with this objective. Hopefully this is the start of an open dialogue around the government’s Tax White Paper.”
Association of Superannuation Funds of Australia (ASFA) chief executive, Pauline Vamos, acknowledged the FSC’s position and said she was pleased to see that it had responded to ASFA’s earlier calls to bring all the associations together to agree on the purpose of the superannuation system, the principles that should be adopted and the data that should be used.
She said that while not all sectors would agree on all the issues, it was clear that a broad policy course was capable of being agreed.
