EDITORIAL: Tax on the ‘rich’ will be a problem for us all

The cleverest part of Treasurer Jim Chalmers’ raid on superannuation balances over $3 million is that — as he keeps telling us — it’s a problem that appears to apply to so few of us.

According to Dr Chalmers’ numbers, there are just 80,000 such accounts in Australia today, or 0.5 per cent of superannuants.

But this is not a problem just for the very rich.

While only a small fraction of us today may have balances greater than $3m, it won’t stay that way forever. According to modelling by Treasury, without indexation within 30 years 1.2 million Australians will be caught in the net.

That number will only increase. So while it may not apply to many of us now, it will certainly be a problem for those just entering the workforce and those who come after them.

A balance of $3m today won’t seem an impossibly large sum by the time your kids and grandkids are actively thinking about their retirement.

Dr Chalmers’ response is that these analyses assume that no changes to the threshold will be made by any future government. There’s an easy way around that — index the figure to keep pace with inflation. But that’s not something that the Labor Government is willing to contemplate, determined to push the legislation through the Senate with support from the Greens when Parliament resumes.

That’s only the start of the problems with these changes, which, as a tax on unrealised gains, are a radical departure from accepted taxation principles in the country.

Those of us who have logged in to their superannuation accounts in the two months since Donald Trump’s so-called “Liberation Day” tariffs came into effect know that super can be volatile.

But, the entire premise of the system is that it is a long term proposition, so we don’t have to worry so much about our balances being buffeted about on the whims of foreign presidents. Theoretically, it will all come out in the wash by the time we need to access it in decades to come.

This change takes away that reassurance. If your balance happens to hit a high on the last day of the financial year, you could be up for a big bill — which you personally need to pay, not your fund. And if your balance happens to fall the following week, well, that’s showbiz baby.

And what of those who have invested their self-managed superannuation in property and assets, such as small business owners and farmers? Increases on paper in the value of that property doesn’t put any extra money in the pockets of their owners or ease the costs of doing business. Regardless, that will be regarded as a capital gain, and those people caught will have to come up with the cash to cover their big new tax bill on money they haven’t made yet, and may never see.

Dr Chalmers appears intent on ignoring the growing chorus of opposition to his flawed policy, determined to ram it through and put off the task of real, serious tax reform which is so long overdue.

Responsibility for the editorial comment is taken by editor-in-chief Christopher Dore