The Committee for Economic Development of Australia (CEDA) has put forward five options for repairing the federal budget balance by 2018, two of which centre around superannuation taxes.
CEDA's first budget repair option includes a progressive super contributions tax with a 15% discount that would generate $6.9 billion in government revenue. This would be supplemented by halving the capital gains tax discount, halving the fuel tax credit scheme, and raising taxes on luxury cars, alcohol and tobacco by 15% - all of which would generate more than $16 billion in revenue.
The second budget repair option includes a marginal tax on superannuation contributions above $10,000, a move that would increase budget revenue by $8.5 billion. This would be supplemented by again halving the capital gains tax discount, and raising taxes on luxury cars, alcohol and tobacco by 20% - generating more than $15 billion in revenue.
Each of the five options also include ways the government could reduce expenditure by about $2 billion, a move that CEDA chairman Paul McClintock supports. He said the reality is "we have been spending more than we earn for too long and we need a realistic approach to returning to [budget] surplus."
"Current generations of Australians have experienced an explosion of wealth in recent decades. Yet by running deficits during this period of economic expansion we are essentially saying that our increased wealth is not enough and we expect future generations to pay for our spending today," McClintock said.
"In particular, if you are under 30 you should be up in arms because the current situation is completely unfair. In addition to the penalty on future generations, as a player in the global economy, running a large deficit means we have no flexibility to respond to unexpected economic shocks.
"Getting back to surplus won't be painless - some of it will be tough but we have tried to ensure almost all measures proposed will not affect the most disadvantaged in our society."
McClintock added these are by no means the only strategies that could be used for budget repair and the CEDA board as a collective did not support one option over another.
We invite you to watch our latest video featuring the head of ANZ ETFS, Kris Walesby.
In it he introduces a new ETF, due for launch later in July, which tracks the Euro Stoxx 50 index of major companies ... Watch video
It is often said by equity managers with a mandate to scour the entire globe for investment ideas that getting the geographic allocation right in any given year is the most important driver of returns.
That's ... Watch video
We invite you to watch our latest video featuring Bell Direct chief executive officer Arnie Selvarajah.
In the video and accompanying article he explains how easily the increasing number of advisers using ... Watch video
Financial Standard editor Mark Smith presents a roundup of the week's biggest industry news and executive appointments. In this week's news:
O'Dwyer says life insurance back on the agenda
After being ... Watch video
We invite you to watch our latest video featuring Zurich Investments senior investment strategist Patrick Noble.
The question of how to generate a satisfactory return to meet investors' needs is becoming ... Watch video
Get it Daily
FREE to your inbox, get the Financial Standard Daily Email.