Anti-aspirational messaging could nix proposed $3 million tax threshold
The Labor Party is contemplating a backflip on its controversial $3 million super tax, according to an AFR report citing three separate sources.
Discussions are reportedly taking place behind closed doors, with former Prime Minister Paul Keating lobbying the government to reverse its decision to tax super earnings at a higher rate.
Prime Minister Anthony Albanese (pictured) went to the election with the policy – which would tax super earnings above $3 million at 30% instead of the current 15% – although it proved highly controversial among allies and opponents.
The Coalition flat-out refused to support the policy, while the Greens demanded the threshold be set at $2 million.
Labor’s decision to not index the threshold to wage growth has drawn sharp criticism that the tax could unfairly capture more people over time through bracket creep.
The current projection is that the proposed tax change will affect 80,000 people and raise $2.3 billion in 2027-28, its first full year of collection.
Following the Coalition’s drubbing in the May election, Labor only needs the Greens’ support to legislate the policy. Thankfully for Labor, the Greens have signalled their willingness to work with the ruling party to get the policy through the Senate.
However, the policy could prove politically toxic for its anti-aspirational message.
Assistant Treasurer Daniel Mulino shot back at the accusation in June, saying: “It currently affects half a per cent of Australian super balances. That will grow over time, but I would argue it will grow slowly over time.
“I just don’t think it’s credible to argue somebody’s aspiration to do better is going to be affected by a slightly less concessional treatment on an amount in their super fund above a very high threshold.”
