Treasurer Scott Morrison has once again slammed Labor’s tax proposal, labelling it “an old fashioned Labor tax sledgehammer targeted at pensioners and retirees to grab as much tax as possible because they can’t live within their means and control their spending”.
Morrison said in a statement today that new data from The Australian Prudential Regulation Authority (APRA) showed that the opposition’s proposal “would rip $3.75 billion out of 2.6 million APRA-regulated superannuation member accounts, including those held by pensioners despite Labor’s so-called ‘pensioner guarantee’.”
This second round hit to the savings of retirees and pensioners comes off the back of the $56 billion tax grab Labor outlined last month, when the party revealed plans to remove the refunds available on imputation credits for people who don’t pay tax.
At the time, the plan included everyone from the super-wealthy who have many specially designed tax-minimisation schemes at their disposal, to pensioners who receive so little income that they don’t meet tax thresholds and even self-funded retirees who have already paid tax on their savings.
Following wide-spread public backlash, Labor then appeared to backflip and announced it would exempt the 14,000 full pensioners and 237,000 additional part-pensioners who would have been impacted by the proposed changes.
According to Morrison however, Labor’s proposal does not exempt pensioners whose APRA-regulated super funds are affected. He said these pensioners will be hit even if they were on the pension before 28 March, 2018.
The minister also cited Australian Tax Office data, which showed that 2,013 of the 2,603 APRA-regulated superannuation funds received franking credits in 2015-16 to the tune of $300 million.
“This means that Labor’s policy would deny around 2.6 million member accounts around $300 million in retirement savings each and every year,” Morrison said.
“Further, these lost savings can’t then generate returns year on year meaning the cost to retirees is even higher. For example, APRA data shows superannuation funds have generated an average return of 3.5 per cent over the last 10 years.
“If the rate of return is the same over the ten years Labor has costed its policy then the cost in retirement savings is $3.75 billion over this ten year period.”
Shadow Treasurer Chris Bowen dismissed the analysis, maintaining that the overwhelming majority of retail and industry super funds would be completely unaffected by Labor’s reforms.
Bowen noted in a statement that the CEO of Industry Super Australia, a collective of super funds that manage the superannuation accounts of more than five million Australians, had also said that “Labor’s proposal to stop refunding imputation credits where no tax has been paid by an investor will have little or no impact on the super of most Australians.”
“The fundamental issue is that Australia can no longer afford to give out cash refunds – it is projected to cost the Budget up to $8 billion a year in the next 10 years,” Bowen said.
“It’s no surprise that Mr Morrison is so focused on Labor’s tax policies, because he’s got no tax reform of his own to talk about, just a $65 billion big business hand out.”
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