There are fresh calls for politicians to do something about their own tax breaks and pension schemes after new analysis revealed just how much they’re costing every day Aussies.
Financial strategists Marinis Financial Group estimates that more than $1.5 billion a year could be saved if pollies removed their own “obscene” tax break.
Hundreds of thousands of public servants and politicians with defined benefit superannuation schemes were given a 10 per cent tax offset on their retirement pension income a decade ago even though they paid no tax on their super contributions or fund earnings during their working years.
“They’re among the most generous schemes in Australia, and probably the world, and they don’t need an extra free kick,” Marinis Financial Group managing director Theo Marinis told News Corp.
“The pensions they are getting have never, ever been taxed, anywhere, but politicians want to start clobbering people who have been taxed the whole way.”
In case you’re wondering, a defined benefit pension typically pays a percentage of a person’s previous salary for the rest of their life, unlike most Australians’ super which is a lump sum that steadily decreases as it gets spent in retirement.
Only politicians and some public servants are lucky enough to get a defined benefit pension.
“Politicians and public servants in untaxed schemes receiving defined benefit pensions cannot double dip. They automatically receive their pension each fortnight, usually automatically indexed to CPI, with no exposure to market volatility,” said Mr Marinis, a former Treasury official.
On top of that, the analysis found that the cost of the scheme is actually rising ever year.
“The cost of those defined benefit pensions is rising by $6 billion a year and there is a $400bn to $600bn shortfall. That increase in costs is conveniently buried and not included in budget figures but it’s a real cost,” said Finance commentator Robert Gottliebsen.
So why all the talk about changing taxpayers super, but no mention of the politicians own pension benefit?
Mr Marinis said pollies are avoiding the topic “because it affects them”.
He says the tax concessions could be stopped by a simple change to the Tax Act.
“You are not supposed to give tax concessions to somebody who hasn’t already paid tax on their super.
How does this make you feel?