The Australian Taxpayers’ Alliance (ATA), the nation’s largest grassroots advocacy group representing taxpayers today published a policy briefing on the superannuation in the lead up to the superannuation guarantee increase on 1 July 2021. The briefing compares the impact cutting taxes on superannuation savings would have on retirement earnings with the impact the planned 12 per cent compulsory superannuation guarantee will have.
The briefing tells us:
The tax on contributions severely impacts a person’s ability to retire comfortably. Without the tax on contributions, a worker would be able to retire on 63 per cent of their working income as opposed to 54 per cent.
Even though Australians do not pay the full capital gains tax rate on the earnings from their superannuation funds, the 15 per cent tax on interest along with high returning superfunds and compound interest over a lifetime add up. Without the tax on earnings, a worker would be able to retire on 61 per cent of their working income.
Without tax on superannuation, Australians would take home close to 73 per cent of their working income. However, as a result of taxes and multiple levels of superannuation, individuals must instead live on 54 per cent of their working income.
Taxes on superannuation cost Australians approximately one-quarter of their retirement income.
An average Australian with an income $65,000 who starts saving at 25 will have a retirement income of $28,300 per year. Without tax the same person would have $37,800 per year on which to retire.
“Superannuation is just another tax that buys the trust of Australian taxpayers with false promises of social security and other benefits,” said ATA Policy Researcher Xin Yuan Quek. “The truth is, these taxes hurt us more than they protect us.”
“Many Australians depend on superannuation to preserve their savings, but they are taxed on contributions, investment earnings, and withdrawals. These taxes accumulate and rob Australians of a comfortable retirement.”
“At the rate the Australian government taxes us on superannuation, it is no wonder 68 per cent of Australians over the age of 65 are unable to survive on their retirement income and end up having to depend on means-tested age pension.”
“The triple taxation of superannuation doesn’t serve anyone well. The federal government only collects $12.9 billion per year in super taxes and yet they have to pay out over $50 billion in the means-test age pension.”
“The superannuation scheme is merely a wolf in sheep’s clothing, robbing taxpayers of financial independence on the pretence of caring for retirees. If the Australian government genuinely cares about our welfare, they would give us the choice to opt-out of superannuation.”