A top economist is backing the government's proposed super tax changes, calling them "much-needed reform." The plan involves doubling the tax rate on superannuation balances over $3 million, from 15% to 30%. This change is set to kick in on July 1, although it's not yet law.
Treasurer Jim Chalmers has said that the new tax will only affect about 80,000 people, or 0.5% of super accounts in Australia. He explained that the tax will apply only to future earnings, not the existing balance, and will raise around $2 billion in its first full year.
While some critics argue that the increase would unfairly drain super accounts, The Australia Institute's chief economist Greg Jericho believes the change is necessary to create balance in Australia's superannuation system. Jericho pointed out that the wealthiest 10% will receive over $20 billion in super tax concessions this year, while 23% of Australian retirees end their working lives in poverty.
The Australia Institute also highlighted how some wealthy farmers and small business owners have been using their super accounts to avoid paying taxes by transferring assets like farms and properties into them. Jericho argues that superannuation tax breaks should encourage savings, not allow the richest to sidestep taxes.
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