Claims that tax concessions on superannuation will cost the Government $2 trillion a year are based on inaccurate figures and assumptions the Association of Superannuation Funds of Australia (ASFA) believes.
The ASFA rejected the assertion made by The Australia Institute executive director, Dr Richard Denniss, who described the tax concessions on super as “the biggest tax rort in Australia” on the institute’s website.
“Tax concessions for superannuation are projected by Treasury to grow at an average of 12 per cent over the next five years,” Dr Denniss said.
“If, like the commission of audit, we simply assume things grow at their trend rates indefinitely then, by 2050, tax concessions for superannuation will cost $2 trillion per year, which will be almost 100 per cent of Commonwealth revenue.”
However, the ASFA said there was “no reasonable basis” for Dr Denniss’ assumptions.
“The Treasury has not projected tax expenditures for the next five years and, even if they did, it would be unusual to project them forward at the same rate for the next 35 years, as Dr Denniss has suggested,” the ASFA said.
“Furthermore, increasing the taxes applied to superannuation would not lead to a doubling of Commonwealth aggregate tax revenues in 2050 from around the current 23 per cent of GDP to around 45 per cent of GDP.”
The ASFA argued that removing or altering the tax concessions on superannuation would reduce Government revenue.
“Even the Treasury itself admits that removing superannuation tax concessions would not generate revenue gains as large as the headline figures suggest.
“In the estimates it prepares based on a revenue gain approach, the Treasury, in fact, shows much lower levels of tax expenditures on superannuation and a lower rate of growth.
“The revenue gain figure for the concession for employer contributions and investment earnings is $27,650 million under the revenue gain approach, compared to $32,100 million under the revenue foregone approach.”
Speaking last month, Former Keating adviser and Commonwealth department head, Dr Don Russell, also supported current tax concessions, warning the super guarantee could not be sustained without them.
