Prime Minister Julia Gillard ruled it out last week, but there's no denying that the Federal Government would like to reduce tax concessions for the wealthy when they access their superannuation. Last year the concessions cost $30 billion in forgone revenue, and Treasuryestimates the figure will increase to $45 billion by 2015–16.
The concessions are designed to encourage more Australians to fund their own retirement, and not burden the public purse by taking the age pension. But in reality, it would be much more cost effective to remove the means test from the age pension and have the rich receive the same $712 per fortnight as the poor.
Australia Institute research fellow David Richardson saysthat in his last six budgets, former treasurer Peter Costello took the cost of super tax concessions from 1.3 per cent of GDP to 3.3 per cent. Meanwhile, the cost of the age pension was at just over 2 per cent of GDP. In 2009, the Australia Institute produced a report titledThe great superannuation tax concession rort, which showed how the concessions redistribute scarce resources away from low-income earners towards the secure and privileged well-off.
The scarce resources are required to fund important but expensive projects such as the National Disability Insurance Scheme, which will improve the lives of countless needy Australians. By contrast, the concessions secure the sometimes obscene lifestyles of wealthy Australians, who believe they are entitled to tax relief.
Business Council of Australia president Tony Shepherd told a round table meeting last Thursday: 'Philosophically, I object to the term 'concessions' ... We go to work, we get paid. The money is ours.'
Such an attitude belongs more to the USA, the land of the self-made man, and not to the Commonwealth of Australia, where we have always been more mindful of the common good.
But it has to be noted that respectable self-made men in the US give generously to their favourite charities and foundations. In Australia, respectable citizens pay their taxes, and welfare and other public needs tend to be government funded. Philanthropy has never taken root. This was confirmed in an Australian Council for Educational Research survey reported in the media today.
The case for tax concessions for wealthy Australians would be more convincing if there was evidence of large-scale philanthropy here. If philanthropists funded welfare and other public service organisations, governments would not need to raise taxes for this purpose. If wealthy Australians would like tax relief, they should think about emulating the self-made men of the USA.