Government slammed for its proposed super tax grab

Government idea called “nothing less than a tax grab” by one industry expert and “farcical” by another.

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The government’s proposal to allow workers earning less than $50,000 a year to opt out of compulsory super has been called “nothing less than a tax grab” by one industry expert and “farcical” by another.

The idea, floated by Liberal senator Andrew Bragg and now being considered as part of the government’s retirement income review, would see lower-income workers able to opt out of compulsory super and have that money diverted into wages instead.

However, as Industry Super Australia (ISA) notes, what could be seen as a pay rise for lower-income workers would also put many of them in a higher tax bracket. And, wages are taxed at a higher rate than super contributions – almost double in most cases.

“The numbers make it clear the real winner is the government, with workers left paying higher taxes to line government coffers,” says ISA.

To highlight its point, ISA released analysis that shows “the extent of the super tax grab” in Tasmania.

“Tasmanian workers will be slugged more than 100 million more in tax every year, only to end up destitute in retirement,” said ISA chief executive Bernie Dean, who called the “dangerous proposal” a “blatant tax grab by the government to prop up its own budget bottom line, at the expense of hardworking Tasmanians’ retirement savings”.

And it seems that Australian workers agree with Mr Dean, with a new Essential Research survey commissioned by the Australian Institute of Superannuation Trustees delivering the government a clear message – leave our super alone.

The survey revealed that just one quarter would rather have the money now than in their super, and only one in 10 disagree with the government policy of lifting compulsory employer super payments to 12 per cent of wages by 2025.

“There is no justification for excluding any worker from benefiting from 12 per cent super, but it is particularly important for people on low incomes, those working part-time or those who have taken time out of paid work as carers,” said Australian Institute of Superannuation Trustees CEO Eva Scheerlinck, who added that people were unconvinced by claims that freezing compulsory super would deliver them a pay rise.

“It is farcical to assume, as some MPs have suggested, that workers will receive a pay rise if the SG is frozen,” she said.

Wealth on Track principal Steve Greatrex agrees, saying that “the truth is a lot of employers won’t pay them more”, but “at least if it’s in the superannuation system people have rights”.

Would you have benefited from having an extra three per cent put into compulsory super?

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    COMMENTS

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    Waiting to retire at 70
    19th Nov 2019
    9:49am
    Oh, what a great idea! Politics reigns supreme over policy.

    Let's keep our poor and vulnerable Australians in a state of poverty ALL their lives. Rather than fix the problem of stagnant wages, wage thief, stolen superannuation, profit based companies selling health insurance, etc.

    And who's this suggestion coming from? A politician who's superannuation contribution from his employer (us) is set at 18%, with the rest of us frozen on 9.5% for years now.

    A plague on his house.
    TREBOR
    19th Nov 2019
    1:18pm
    Re-installation of the Master/Servant relationship in perpetuity, and a reversion to feudal times when the 'lord' gets everything and the peasants give as required and live in squalor.. and work as directed.

    Without financial independence, any individual has little to no real rights.... and nowhere is this more clear than in our 'court' system...
    MICK
    19th Nov 2019
    4:16pm
    Spot on Waiting. I'm waiting for the franking credit retirees who sol us out to see what they have done to their own family members who are low income earners. I'm ashamed of the bunch on this website who jumped ship and sold us out.
    Paddington
    19th Nov 2019
    8:52pm
    Mick, And made us all targets. Now the younger generations think we are greedy, selfish boomers. We have been put into one homogenous group even if we are outside the boomer years which run from 1946 to 1964. This covers 55 year olds through to 73 year olds.
    Now we are stuck with a government that thinks old people should be retrained and put to work.
    I think it is a cover up for not raising Newstart as they realise many oldies are relying on it not just young people.
    There are a lot of people who are even poorer than most retirees. They don’t have enough food or somewhere safe to live. There is no work for some and there is a lot of financial pain due to low wages or insufficient hours.
    The economy is stagnant because people who have money are not spending.
    Raise Newstart
    Of course there are some people who need extra money and think making super not compulsory for low wage earners but would it solve anything in the long term?!
    Rosret
    19th Nov 2019
    10:26am
    Who, when, what?
    Superannuation is paid by businesses on top of the employees salary. What this is proposing is that individuals who earn less than $50K (which is an awful lot by the way) will now have effectively 9% of the gross salary less and have no preparedness for retirement.

    This is a complete reversal of special tax incentives to put money into super.

    I haven't heard this suggested anywhere other than in this article.
    Viking
    19th Nov 2019
    10:29am
    You can be sure that any LNP Policy which appears to put more money in workers pockets is intended to result in more tax for the government. With the LNP's attitude to super, reduced spending on education, health, pay and penalty rates and its "couldn't care less approach to the future welbeing of this country eg its climate change denial, we could be excused for thinking its ultimate aim is a return to serfdom.

    19th Nov 2019
    10:46am
    What else can one expect from the LNP? They're incompetent, and wish to make everybody slaves to their God, The Economy.
    Mariner
    19th Nov 2019
    7:12pm
    Has the opposition now a no name account on this forum? Who are you??
    Tanker
    19th Nov 2019
    10:50am
    Just how out of touch with reality is this mob they call a government.
    Tanker
    19th Nov 2019
    10:50am
    Just how out of touch with reality is this mob they call a government.
    old frt
    19th Nov 2019
    11:11am
    If you read the article it says "they can opt out of super" (below $50000 income )and receive the extra income now.
    Some people would very much appreciate the extra income now ,single income families ,or someone paying off their home !!!
    A roof over your head and the OAP is a much better situation than the OAP, renting and less than $200000 in super.
    TREBOR
    19th Nov 2019
    1:20pm
    One can safely assume that their long-range plan is that by the time such peasants get to retirement, they will be dependent on anything but OAP, and their home will be part of the assets test, so they will be chopped off at the knees.
    Rosret
    19th Nov 2019
    7:24pm
    The majority of low income earners are juniors. If they don't start putting into super from day 1 then they'll never have a descent retirement income.
    Greg
    19th Nov 2019
    10:46pm
    All this will do is increase the pension cost to government in years to come....what a great idea...NOT.
    Discontented
    21st Nov 2019
    12:10pm
    Good point old frt
    Discontented
    21st Nov 2019
    12:10pm
    Good point old frt
    floss
    19th Nov 2019
    11:18am
    Yes Viking my thoughts as well could you ever trust this government to do any thing for working people.Every time they change the super rules it makes super less attractive.
    TREBOR
    19th Nov 2019
    1:22pm
    What a pity Labor is so addicted to feminism and all the other -isms and minority rubbish.... until they return to their base constituency - those who work for a living in reality - they will never be a viable political force, and this lot will go on forever just smashing everything up.

    Bring on The Trebor Party...

    Pity I'm so tied up in fire relief at the moment - tired and hardly got time to scratch meself...
    ronloby
    19th Nov 2019
    12:36pm
    The GG should SACK them all.
    Waiting to retire at 70
    19th Nov 2019
    3:20pm
    But he won't he works for the Queen. Despite what people think, he ONLY takes directions from her - a foreigner in our midst. This is evident in the papers SHE has embargoed from "Australian-eyes" (her words) for 50 years after her death relating to her part in the conspiracy she participated in to overthrow an Australian government in the 70's..

    Similarly when Lord Mountbatten conspired with "our betters" (including newspaper owners, surprise, surprise) in the UK during the Prime Minister-ship of Harold Wilson, to overthrow that government (yes, a coup), the Queen told Uncle Louie 'best not do that'. Anyone else doing such a thing as Lizard Louie would have had their heads chopped off. But he was one of THEM. That too was tucked away in the archives for 75 years after the death of QE2.

    Protecting the Australian community must stop being a SPECTATOR SPORT.
    Sceptic
    20th Nov 2019
    1:46pm
    Another conspiratory theorist.
    TREBOR
    19th Nov 2019
    1:16pm
    On the one hand, governments whine endlessly about the 'cost' of pensions etc - then with the other they decide that people with the most likelihood of ending up on full pension should not have super...

    Been trying to tell yez for years that government apparatchiks are not intelligent or even smart by any means - just seat fillers.
    BillF2
    19th Nov 2019
    3:54pm
    The basic failing of the Australian superannuation system is its inbuilt inequity. The more you earn, the more you are able to contribute to super, and the greater the sum you are able to retire on, that is until Centrelink becomes involved. (Funny how you never see ex-politicians at a Centrelink office). The suggestion by Andrew Bragg only highlights the inequity, but doesn't address it. This is just tinkering around the edges to try and create the impression that something better is being done, when in reality the whole system needs to change, so that all retirees receive a liveable income regardless of what they have been able to contribute. Obviously those who are able to save more will be better off, but that is no reason to penalise the rest of society and force them to live in poverty or on the bread line. The sooner the federal government gets off its collective arse and organises a workable, liveable pension scheme for all Australians, the better.
    Rae
    20th Nov 2019
    2:12pm
    Well said. Eliminating the inequality and all the efforts people go to to get the aged pension by making it universal would actually save money.

    Tax concessions for super, the fees and charges and insurances, the franking credits, the negative gearing could all cease.

    Everyone over say 65 gets a pension and concessions and pays tax on other income from savings after tax during their working lives if so inclined for a better retirement.

    Simple and much cheaper.
    Captain
    20th Nov 2019
    6:00pm
    BillF2 & Rae,

    You are both correct. I have discussed this issue with our Federal political on several occasions but it is all to hard for them.

    At least our Fed guy finally agreed with me that the lowering of the Assets Limit in the 2014 Budget that came into effect in Jan 2017 was something that did not really need to happen.

    However revising the limt back upwards is not on the agenda.
    MICK
    19th Nov 2019
    4:14pm
    Can't you just see this business directed government trying to steal the next entitlement from lowly paid AUSTRALIAN workers. They just roll from one theft to the next attack.
    If this gets up it'll be the end of this corrupt bunch of misfits. They're already on the nose and this would be the next slap in the face for those doing it tough.
    Rosret
    19th Nov 2019
    7:26pm
    I don't even think its a genuine consideration. I have heard nothing of this anywhere else.
    floss
    19th Nov 2019
    7:07pm
    Agree Mick.
    Circum
    20th Nov 2019
    8:40pm
    The $50000 is an arbitrary figure so lets make Andrew Braggs suggestion applicable to all workers.In order to test the benefits of his suggestion,we could cancel his superannuation entitlement.Tax him fully on all income and then review the results in 10 or 20 years.

    Unbelievable suggestion by Braggs.
    Circum
    20th Nov 2019
    8:40pm
    The $50000 is an arbitrary figure so lets make Andrew Braggs suggestion applicable to all workers.In order to test the benefits of his suggestion,we could cancel his superannuation entitlement.Tax him fully on all income and then review the results in 10 or 20 years.

    Unbelievable suggestion by Braggs.
    VeryCaringBigBear
    22nd Nov 2019
    10:37am
    Great idea as those earning under $50,000 should not be contributing to super as it's only eaten up by fees and insurance.
    Pardelope
    22nd Nov 2019
    7:21pm
    I have been advised by a tax accountant that if you have super and die, recent changes by the LNP government means that the Govt will tax the amount accrued by 17%. His advice was that if you are terminally ill, it would be advisable to withdraw the super and put it into a bank account - where it will not be subject to this "death tax by stealth". Another option would be the popular end-of-life world cruise.


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