Chalmers unmoved but indexation remains possible

ANALYSIS

The Greens may be the final determinant of whether the Government ultimately applies indexation to its $3 million superannuation tax concession policy.

While in the last Parliament the Greens pressed for the lowering of the $3 million threshold to $2 million, the party also expressed its concern about the need for indexation to reduce what amounts to bracket creep.

What has been lost in the current campaign being waged against the Government’s policy is that while the Greens called for the lowering of the threshold from $3 million to $2 million, the party also advocated that it be “indexed in line with inflation”.

For his part, the Treasurer, Jim Chalmers last week acknowledged the probable role of the Greens noting that the party’s most recent position was lowering the threshold while noting that “they’ve talk about indexation as well”.

Chalmers also stressed that many of the arguments sitting at the core of the current media campaign against the tax changes were based on misguided assumptions that the $3 million threshold would never change.

He made clear that the Government and Treasury’s expectation was that the thresholds would be changed by future Government.

“I think we’re making it consistent with other areas of the tax system where the threshold is not indexed,” Chalmers said. “I fully anticipate that governments of either, if not both political persuasions at some point in the future will change the threshold.”

“And that’s why a lot of the calculations that you see reported in the media are based on a pretty unrealistic assumption about what the next 30 or 40 years will look like,” the Treasurer said.

Chalmers last week insisted that the Government had not yet sought to talk to the cross-bench about the legislation but that he expected discussions to occur in the next couple of weeks when the make-up of the Senate cross-bench is finalised.

It was also worth noting that Chalmers last week was largely unmoved about the vociferous campaign about the taxation of unrealised capital gains, arguing that people with more than $3 million in superannuation “have got access to pretty useful advice”.

“But, secondly, we did consult on this for some years, and this is the way that we propose to go forward,” the Treasurer said.