Tasmanians earning under $50,000 a year would be slugged more than $100 million in extra personal tax a year if a proposal to allow low income workers to opt-out of compulsory superannuation gets the green light.
Industry Super Australia (ISA) today released new analysis showing the extent of the super tax grab by Tasmanian federal electorates, with Bass workers suffering the brunt of the proposal, followed by workers in Clark (formerly Denison).
Under the proposal floated by Liberal Senator Andrew Bragg and being considered as part of the Federal Government’s Retirement Income Review, workers earning under $50,000 a year would be allowed to opt-out of compulsory super, and instead receive the amount of money that would have gone into their super account, in wages instead.
While the idea is being touted by some as a pay boost for low income workers, the numbers make it clear the real winner is the Government, with workers left paying higher taxes to line government coffers.
This is because wages are taxed at a higher rate than super contributions – almost double in most cases – meaning workers who take super as wages will raid their retirement savings only to pay more tax.
The new analysis from ISA shows that more than 100,000 workers in Tasmania would be caught by this proposal. These workers would not only lose a total of $350 million a year in retirement savings, they would be slugged an extra $101 million in personal tax, leaving them worse off now and in the long run.
For the average worker in Tasmania, this equates to around $1,000 a year more in tax.
Personal tax increase
Clark (formerly Denison)