Labor fiddling with super tax while the economy burns

It is hard to wrap one’s head around Labor’s economic policies which, as The Australian’s editorial rightly says, are “slugging savings with new taxes and small businesses with higher costs”.

Indeed, the entire concept of measuring economic performance to highlight weaknesses needing to be addressed seems to have been turned on its head. Savings are not needed to pay down debt. Record expenditure resulting in negative GDP per capita growth over eight quarters, the lowest current defence spending in decades, ever ballooning electricity prices, and the destruction of Australia’s manufacturing capacity is ignored. This is a country now run by Labor slogans and no substance. Not only will investment capital flee the country but many wealth creators too. And even if the numbers continue to get worse, the frog in hot water will ignore the heat until its skin starts pealing. By then it will all be too late. Jim, what is your Plan B?

Peter Tredenick, Laidley, Qld

Labor’s formula for economic growth is broken (“Ground control to Doctor Jim: our economy is on life support”, 5/6). Its adherence to redistributing wealth from the rich to the poor stultifies aspiration, risk taking and innovation – all essential elements for private sector-led economic growth.

Jim Chalmers states his proposed tax on unrealised capital gains impacts only “about half a per cent of people” on superannuation, but he fails to mention that the top 1 per cent of Australian taxpayers contribute almost 20 per cent of total personal income tax revenue. Chalmers will continue to blame external forces for the nation’s poor economic performance, but it’s his own policies that are sapping all vitality out of the economy.

Ron Hobba, Camberwell, Vic

One way to properly test a proposition like unrealised capital gains tax on super accounts is to consider how it works at the limit. Say someone with a very low risk appetite has an SMSF comprised solely of Treasury bonds totalling in excess of $3m. They will have a fixed income and absolute certainty as to what the redemption value will be when the bonds are held to term, which is exactly what they want. But bond prices are volatile over time, so there is every chance the bond holder will be subject to an unrealised capital gains tax some or most years. Taxpayers know, with absolute certainty, that any “tax payment” will never be refunded when the bonds are redeemed because tax refunds have been ruled out.

This loss to the taxpayer is not a “tax”, it is an arbitrary asset confiscation. Jim Chalmers will not address the workings of this tax in detail. He ducks and weaves. He won’t address the indexation and unrealised capital gains tax issues rationally because he can’t and he knows he can’t. Instead he attacks the opponents of the tax.

Ross Beames, Brisbane, Qld

The taxing of unrealised capital gains in super funds over $3m sounds intuitively wrong for self-managed superannuation funds for smaller businesses, including farmers, if their superannuation fund does not earn enough cash and they are forced to borrow or sell assets to pay the tax. But other than that, the proposed changes appear equitable given the proposed tax rate of 30 per cent is still well below the marginal rate of 47 per cent that would otherwise be paid on earnings and any drawdowns from the superannuation fund after age 60 are tax free.

Ken Clarke, Tweed Heads, NSW

Jim Chalmers knows he would be humiliated if he backs down on his “unrealised gains” superannuation tax. The saga brings back memories of Paul Keating’s humiliation by Bob Hawke over the “Option C” consumption tax when Hawke withdrew his support for Keating’s proposal at the 1985 national tax summit. It lead to increased leadership tensions between the two. Is ALP history repeating itself?

Riley Brown, Bondi, NSW

Taxing unrealised gains on super funds makes no sense. Much angst will be generated by this move but I believe I’ve found some small solace. We’re told Labor won heavy support among younger voters. These voters are clueless as to the real nature of socialism, whether it be of the Labor variety or the Greens type. Perhaps after this has come to pass, the Coalition may have finally realised what sensible leadership is and provide a time-tested alternative to this chaos.

LJ O’Donoghue, Richmond, Vic