Not for turning: Chalmers rounds on super critics and stands by his plan

Any changes to a planned tax hit to large superannuation nest eggs could take years to be put in place after Treasurer Jim Chalmers signalled he would stare down demands to index the $3 million threshold for the impost.

As the Coalition claimed the government would have to lift other taxes because its superannuation plan would fail to raise the revenue it was banking on, Chalmers accused critics of self-interest in opposing a modest reform that would affect a “sliver” of people.

Treasurer Jim Chalmers says his superannuation changes are needed to repair the budget.Credit: Alex Ellinghausen

Announced two years ago, the government is planning to double the concessional tax rate from 15 per cent to 30 per cent on earnings above $3 million in superannuation accounts from July 1. The move is expected to raise $2.7 billion in its first full year of operation.

It has been criticised by many in the business and funds management community, with concerns that unrealised capital gains will be taxed. There are also worries that the $3 million threshold, which is expected to affect about 80,000 accounts, will not be indexed with either wage growth or inflation.

Without threshold indexation, more people, including those on median wages, will eventually be caught in the higher tax rate.

But Chalmers said he would not index the thresholds, leaving the issue to future governments.

“There are a lot of thresholds in the tax system, and more broadly, that aren’t indexed. And what that means is that governments of either political persuasion into the future can take decisions to lift the threshold,” he said.

“So some of this analysis that you see about the thresholds in 30 or 40 years’ time that assumes, I think wrongly, that no government of either persuasion will change that threshold.”

Chalmers defended the overall change, saying the extra revenue from the proposal would go to repairing the budget and providing services and that many critics were speaking out of self-interest.

“I understand that when you’re making a change, even a modest one like this one, people have views about it, and people with very large superannuation balances will have views about it. Political opponents will have views about it as well,” he said.

One of those critics, Liberal senator Andrew Bragg who chaired an inquiry into the changes, said it appeared people were already rearranging their finances before the start date.

That would reduce the revenue the government was counting on from the changes, forcing it to look elsewhere for more money.

“The government will have to do a dirty deal with the Greens to get this tax through, and in the process, they could well expand it to other assets or lower the threshold,” he told Sky News.

“There’s a huge risk of being expanded to other assets and vehicles. It will damage investment, particularly around nimble, disruptive investment, the sort of investment that we need in an economy which is really in danger, I think, of heading backwards over the next 10 years.”

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