Will Labor’s super tax hike become Anthony Albanese‘s Bill Shorten moment?
The plan to increase taxes from 15 to 30 percent on super balances above $3m includes taxing what’s termed ‘unrealised gains’.
That means taxing the assets that make up the super fund providing annual income to retirees before the assets are even sold.
It could force properties held in super to be sold as their value rises, which is making plenty of older Australians decidedly uncomfortable.
The tax hike laws are currently held up in the Senate and might not pass, but if they do we would be the first nation on earth to ever legislate such a whacky policy.
The growing concerns among retirees reminds me of the backlash Shorten faced ahead of his ill fated attempt to win the 2019 federal election by arguing the case for changes to franking credits.
That election was thought to be in the bag for Labor. Unloseable given all the leadership turmoil within the Coalition government, and given that Labor led in every major opinion poll published over the course of two years counting down to election day.
The turnaround on the day was put down to a backlash, especially amongst older Australians, because of policies like the franking credits changes.
Self funded retirees understandably crack it when they plan for their fixed income retirement based on tax structures that get changed, eroding their fixed income when they no longer have the capacity to work to supplement it.
Which is exactly what Labor’s doubling of the super tax will do, not to mention the assets in super funds that will need to be sold because of the plan to tax unrealised gains.
Property in super portfolios is one of the most ill-liquid asset classes going around.
Fancy having to sell a property in your super fund because some assessor says it’s notional value has increased over the previous year as house prices continue to soar – when living off the rent from that property was your retirement plan.
That’s the real world impact of Albo’s super changes, which by the way, weren’t even taken to the last election.
He told us before the 2022 election that if Labor was elected to government there would be no new taxes.
So the attempt to double the super tax is another broken election promise, if it gets legislated.
One that has the potential to hurt Albo electorally the same way Shorten’s proposed tax hikes hurt him at the 2019 election.
You can see the Coalition sharpening their attack ads as it prepares to try and oust Albo from office early next year.
While the Senate might save Albo and Labor from its planned broken election promise by rejecting the proposed legislation necessary to increase super taxes, I’m not sure that prevents a backlash at the ballot box.
We know Labor wanted to double super taxes. We know that if it gets re-elected it will try and legislate the tax hike in its second term.
So the foundations for a strong campaign to chuck Albo out lest he slugs self funded retirees with higher taxes if he wins a second term have already been laid.
by PETER VAN ONSELEN