Richard Denniss, from the Australia Institute think tank, is outraged at the current superannuation double-standards. He asserts that both sides of politics have failed to correct a flaw in the superannuation system that unfairly rewards the rich at the expense of the poor. He further claims that this failing blows a $30 billion hole in the Federal budget each year.

Mr Denniss says, “There’s a very clear problem at the moment” tax concessions go disproportionately to the wealthy. We could fix that and we could save the Budget a lot of money.”

At the heart of the problem is the disproportionate ta rate between income and superannuation tax.

High-income earners pay 45 cents on the dollar when they earn above $180,000, while income from a superannuation account is taxed at the flat rate of 15 cents in the dollar.

Compare this to a low-income earner who pays no tax while earning below the tax-free threshold of $18,000, yet still paying the flat rate of 15 per cent on their superannuation savings.

Because of this disparity super tax concessions flow largely to Australia’s super-wealthy.

“High-income earners,” said Dr Denniss, “get a tax break, while low-income earners pay more tax on their super than their income. It’s ridiculous.”

Just to add salt into the wound, any income from superannuation is entirely tax-free once the policy-holder is over 65.

“If you can sink $100 million into your super fund, and you are over 65, you will never pay tax. It’s obscene.

“The system is broken. It’s unaffordable and there is no chance it will last for the next 40 years.

No one, it appears is winning from this strategy. “A government that decides that high-income earners don’t have to pay tax is costing itself a log of money,” continued Dr Denniss. And yet both sides of politics have failed to address the problem. Mr Denniss suggested this may be because they desired to win the backing of such influential people.

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