The Liberals will go to the next election pledging to repeal Labor’s plan to increase the tax on high-end superannuation accounts.
A new plan revealed by the prime minister and treasurer on Tuesday will double the current tax rate to 30 per cent for balances above $3 million from 2025/26.
It will impact about 80,000 Australians and is expected to raise $2 billion in the first full year and $3.2 billion over five years.
Treasurer Jim Chalmers says the changes are modest and responsible economic management.
“The changes are about making superannuation more sustainable by making the tax breaks more affordable,” he told reporters in Canberra on Wednesday.
Dr Chalmers said the savings would be banked instead of putting them back into the system by adding super to paid parental leave.
“While it was the government’s intention to add super to the leave, it wasn’t something that was affordable at the moment, he said.
“This change is about budget repair.”
But Opposition Leader Peter Dutton has vowed to repeal the legislation if the coalition wins the election due in the first half of 2025, attacking the government for breaking its pre-election pledge to not touch superannuation.
“We’re dead against it. We’re not going to stand by and watch Australians attacked,” he told reporters in Melbourne.
Mr Dutton said the government’s language about minor changes didn’t mean anything to hardworking Australians who put their money into super.
“Every Australian should be unsettled by what Labor is doing at the moment,” he said.
“The first change will be on higher-income Australians. The next change will be on people on the next rung down and the next rung down after that.”
Shadow treasurer Angus Taylor said the government wasn’t being honest about the number of Australians the change would impact.
He said the $3 million threshold wasn’t indexed, meaning more people creeping above it as inflation rises, especially with people investing in their super decades before they retire.
“This is an attack on aspirational middle Australia,” he said.
But the government is using comments Mr Taylor made in 2016 to dent his opposition to a measure he previously supported.
“It’s totally inappropriate someone who has contributed millions and millions of dollars continues to get those 15 per cent tax concessions,” Mr Taylor said at the time.
Opposition finance spokeswoman Jane Hume said the government’s pledge to not have the new rules apply retrospectively wasn’t good enough
She said the legislation won’t be grandfathered, affecting people who invested in the past under the old rules and hadn’t realised their gains yet.
Dr Chalmers says the government had struck the right balance with the $3 million threshold.
Prime Minister Anthony Albanese said it was hard to argue super accounts with balances of $3 million or more were about “actual retirement incomes”.
“Most Australians would be quite surprised that there are 17 Australians who have over $100 million in their superannuation accounts, and one has over $400 million,” he told ABC radio.
“Most Australians will would agree that’s not what superannuation is for.”
The Australian Institute of Superannuation Trustees supports the tax hike, saying it would address the inequality of tax concessions.
CEO Eva Scheerlinck said it was important to note the higher concessional tax rate of 30 per cent was still lower than the highest marginal tax rate.
“So there is still a tax benefit from the money remaining in super,” she said.
The prime minister and treasurer ruled out any further changes to superannuation this term.
They also ruled out scrapping capital gains tax exemptions on the family home to raise more revenue.
Dominic Giannini and Paul Osborne
(Australian Associated Press)