Although our super subsidies are over the top – particularly favouring the wealthy – we need to be careful not to throw some babies out with the bathwater, writes economist Chris Richardson.
It’s about time. And the good news is that, done right, our policies on super can hit two birds with one stone:
How about an updated and simplified version of the contributions tax changes proposed in the Henry tax review? The “prosperity purpose” of super isn’t well understood. Imagine two people earning the same income. One spends it all, and the other saves some. But those savings earn income, which then gets taxed again, meaning one person ends up paying more tax than the other simply because they saved.
And because politics makes it hard for governments to “save” – to run surpluses – taxpayer subsidies for super can effectively lock up national savings in a way that governments can’t.So, although our super subsidies are over the top – particularly favouring the rich – we need to be careful not to throw some babies out with the bathwater.
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