Will Labour’s super tax rise become Anthony Albanese’s Bill Shorten moment?
The plan to increase taxes from 15 to 30 per cent on super balances over $3 million includes taxing what are called “unrealized gains”.
That means taxing the assets that make up the super fund that provides annual income to retirees even before the assets are sold.
It could force properties held in super to be sold as their value rises, making many older Australians decidedly uncomfortable.
The tax increase bills are currently held up in the Senate and may not pass, but if they do, we would be the first nation in the world to legislate such a crazy policy.
The growing concerns among retirees remind me of the backlash Shorten faced before his ill-fated attempt to win the 2019 federal election by championing changes to franking credits.
That election was thought to be in the Labor Party’s pocket. Inescapable given all the leadership turmoil within the coalition government, and given that Labor led every major opinion poll published over the course of two years, counting down to election day.
The turnaround that day was attributed to a backlash, especially among older Australians, due to policies such as changes to franking credits.
The unrealized gains tax is a key part of Treasurer Jim Chalmers’ retirement reform package.
Self-funded retirees understandably get over it when they plan for retirement on a fixed income based on changing tax structures, eroding their fixed income when they no longer have the ability to work to supplement it.
Which is exactly what Labor will do by doubling the super tax, not to mention the super fund assets that will have to be sold because of the plan to tax unrealized profits.
Properties in superportfolios are one of the least liquid asset classes out there.
Can you imagine having to sell a property in your super fund because some valuer says its face value has increased from the previous year as house prices continue to rise, when living off the rent on that property was your retirement plan? ?
That is the real-world impact of Albo’s super changes, which, by the way, were not even carried into the last elections.
He told us before the 2022 election that if Labor were elected to government there would be no new taxes.
So the attempt to double the supertax is another broken electoral promise, if legislated.
One that has the potential to hurt Albo electorally in the same way that Shorten’s proposed tax increases hurt him in the 2019 election.
Is Anthony Albanese having a Bill Shorten moment? His super policies could alienate the same demographic as Shorten’s policies
The Coalition can be seen fine-tuning its attack ads as it prepares to try to oust Albo from office early next year.
While the Senate could save Albo and the Labor Party from their broken election promise by rejecting the proposed legislation needed to increase super taxes, I’m not sure that will prevent a backlash at the polls.
We know that the Labor Party wanted to double super taxes. We know that if he is re-elected he will try to legislate tax increases in his second term.
So the foundations have already been laid for a strong campaign to oust Albo to prevent him, if he wins a second term, from punishing self-financed retirees with higher taxes.