Retirement
Government slammed for ‘tax grabbing’ low-income super proposal
A proposal floated by government that would see workers earning less than $50,000 a year able to opt out of compulsory super has been slammed as nothing more than a tax grab.
Government slammed for ‘tax grabbing’ low-income super proposal
A proposal floated by government that would see workers earning less than $50,000 a year able to opt out of compulsory super has been slammed as nothing more than a tax grab.
The idea is being considered as part of the federal government’s Retirement Income Review, which is looking at the “three pillars” of Australia’s existing retirement system: the means-based Age Pension, compulsory superannuation and voluntary savings.
Floated by Liberal senator Andrew Bragg, the proposal would see workers earning less than $50,000 able to opt out of compulsory super and instead receive the amount of money that would have gone into their super account in wages instead.
Industry Super Australia (ISA) has weighed in on the idea, noting that while the idea is being touted by some as a pay boost for low-income workers, “the numbers make it clear the real winner is the government, with workers left paying higher taxes to line government coffers”.
Wages are taxed at a higher rate than super contributions, with ISA indicating that this is almost double in most cases.
According to the industry body, it means that workers who take super as wages will raid their retirement savings only to pay more tax.
To highlight its point, it has released analysis that shows “the extent of the super tax grab” in Tasmania.
ISA said 102,500 Tasmanian workers would be affected by the proposal, which would see them losing a total of $350 million a year in retirement savings, while also being slugged an extra $101 million in personal tax.
This equates to around $1,000 more in tax payable for the average worker each year.
Commenting on the issue, ISA chief executive Bernie Dean slammed the “dangerous proposal”.
“Tasmanian workers will be slugged more than 100 million more in tax every year, only to end up destitute in retirement.”
Arguing that “the numbers don’t lie”, Mr Dean called it “a blatant tax grab by the government to prop up its own budget bottom line, at the expense of hardworking Tasmanians’ retirement savings”.
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