Labor’s radical plan to double taxes on Australians with more than $3 million in super looks set to be abandoned due to opposition in the Senate.
Treasurer Jim Chalmers has now indicated that he would not be willing to compromise with the Greens and independent senators to pass this bill before the next election scheduled for May 2025.
“The Greens want to vote against fairer taxes for people with millions of survivors,” he said on Tuesday morning.
Dr Chalmers compared the Greens who oppose this bill, on the basis that the $3 million threshold was too high, with the minority party who previously blocked Labour’s Help to Buy and Build to Rent plans.
“This is housing again, with the Greens saying they want fairer taxes and then voting against it,” he said.
“They shouldn’t need us to sweeten the deal to do the right thing.”
In a confusing sign, Finance Minister Katy Gallagher declared that Labor was pressing ahead with its retirement plan in the face of continued opposition from the Senate.
“We are in negotiations to get this passed to the greatest extent possible, but certainly that remains Labor policy,” he told reporters in Canberra on Tuesday.
Labor’s radical plan to double taxes on Australians with more than $3 million worth of super looks will be abandoned due to opposition in the Senate (pictured, shoppers at Sydney’s Pitt Street shopping centre)
“I will not give up until the bells close when we finish this week to pass all of our legislation.”
The government announced on Sunday that it would abandon its Misinformation and Misinformation Bill after the Greens declared their opposition, but has yet to officially capitulate on its retirement policy.
The Labor Party announced early last year that the government would double to 30 per cent – from 15 per cent – the concessional rate on the top 0.5 per cent of pension balances.
Prime Minister Anthony Albanese’s government argued that this policy, of doubling taxes on super contributions, would affect only 80,000 people with more than $3 million in retirement savings.
The proposed law also included an unprecedented plan to tax unrealized profits.
This would effectively make Australians pay tax on the increase in value of an asset they still owned and had not yet sold if they had retirement assets above that $3 million threshold.
Labour’s proposal is radical because individuals normally pay tax on an asset after they have sold it, not before.
This policy, never applied anywhere else in the world, would have forced Australians with self-managed super funds to sell things like property or farms.
Treasurer Jim Chalmers has now indicated that he would not be willing to compromise with the Greens and independent senators to pass this bill before the next election.
While European countries have taxed unrealized gains on wealth, they have not focused on retirement savings.
In March last year, the Greens declared they would oppose Labour’s plan to double taxes on super contributions over $3 million because it did not go far enough.
They wanted the threshold for the 30 percent tax rate to be $1.9 million and the additional revenue to be used to increase Social Security payments.
Teal MPs opposed taxing unrealized profits under Allegra Spender, who represents the wealthy electorate of Wentworth, in Sydney’s eastern suburbs, and worked with Canberra-based senator David Pocock to stop the policy.
Labour’s package was designed to raise $2 billion in forgone revenue.
But with the Greens and independent senators opposed to the bill, Labor could abandon the policy of high super contributions before the next election.
The Coalition opposed Labour’s super policies from the start.
Last month, the SMSF Association called on the Senate to reject Labour’s legislation in its entirety, after the bill was passed by the House of Representatives.
Prime Minister Anthony Albanese’s government argued that Labour’s policy of doubling taxes on super contributions would affect only 80,000 people with more than $3 million in retirement savings.
Chief executive Peter Burgess said Labour’s retirement savings bill would be bad for farmers with self-managed super funds, who would be forced to sell farm assets that are tied up in their retirement.
“In all likelihood, the fate of this bill is now in the hands of the Senate caucus, and we urge them to listen to the concerns raised by a growing number of constituents,” he said.
‘Despite all the evidence about unintended consequences that has been presented to the government since this tax proposal was first mooted in early 2023, it appears determined to press ahead with taxation of unrealized capital gains which will be disastrous for thousands of primary and small producers and family businesses that will be affected by this tax.’
If Labor pushes forward with this bill and seeks a people’s mandate, it would also face a negative campaign from the self-managed super fund lobby before the election, echoing what happened in 2010 when Labor proposed a tax to mining.